Oil prices held near two-week highs on Tuesday as investors assessed the latest developments in U.S. tariffs and a bigger-than-expected increase in OPEC+ output for August.

Brent crude futures rose 29 cents, or 0.4%, to $69.87 a barrel by 11:07 a.m. EDT (1507 GMT), while U.S. West Texas Intermediate (WTI) crude rose 11 cents, or 0.2%, to $68.04. That put both benchmarks on track for their highest closes since June 23 for a second straight day.

Major Asian economies Japan and South Korea said on Tuesday they would try to negotiate with the U.S. to soften the impact of much higher tariffs that U.S. President Donald Trump now plans to impose in early August.

Trump escalated his trade war again on Monday, telling 14 countries they would face tariffs ranging from 25% on countries including Japan and South Korea, to 40% on Laos and Myanmar. Trump's tariffs have raised uncertainty across markets and concerns that they could hurt the global economy and oil demand. In Germany, Europe's largest economy, exports fell more than expected in May, data showed on Tuesday, as U.S. demand fell for a second straight month due to the tariffs.

While prices appeared to be pressured by OPEC+ ending voluntary production cuts, tightening middle distillates and Houthi attacks on cargo ships were supporting the market, said Janiv Shah, an analyst at energy consultancy Rystad Energy. On Saturday, the OPEC+ group, made up of the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, agreed to increase output by 548,000 barrels per day (bpd) in August, on top of the 411,000 bpd increase in the previous three months.

After a seasonally declining oil demand, increased OPEC+ exports will hit the market, raising the risk of a price decline, analysts at HSBC said in a note.

Commerzbank analysts expect Brent prices to fall to $65 a barrel as oversupply emerges in the autumn months. The OPEC+ decision wipes out almost all of the 2.2 million bpd of voluntary cuts the group has made since 2023.

The producer group is set to agree to an increase of about 550,000 bpd for September when it meets on Aug. 3, sources told Reuters, which would undo all the cuts.

US OIL INVENTORIES

The American Petroleum Institute (API) trade group and the U.S. Energy Information Administration (EIA) will release U.S. crude inventories data on Tuesday and Wednesday, respectively. Analysts expect energy firms to draw about 2.6 million barrels of oil from U.S. inventories during the week to July 4.

If confirmed, it would be the sixth time energy firms have pulled oil from storage in seven weeks. That compares with a decline of 3.4 million barrels during the same week last year and an average increase of 1.9 million barrels over the past five years (2020-2024).(alg)

Source: Reuters