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Concerns about supply from Iran, Russia and Canada cause oil prices to rise

Early Tuesday morning, oil prices in Asia rose on supply concerns. Iran is set to reject the U.S. proposal for a nuclear deal that would ease sanctions on Iran, a major oil producer. Meanwhile, wildfires in Canada have affected production.

Brent crude futures rose 55 cents or 0.85% to $65.18 per barrel at 0000 GMT. U.S. West Texas Intermediate Crude was up 59 Cents, or 0.94 %, to $63.11 per barrel after rising by around 1% in the previous session.

Both contracts rose by nearly 3% the day before after OPEC+ decided to limit the increase in production in July to 411,000 barrels a day. This was lower than the market expected and similar to the rise in previous months.

Tuesday's prices were supported by geopolitical tensions. Iran is set to reject the U.S. proposal for settling a decades-old dispute over nuclear energy, an Iranian diplomat told Reuters on Monday. The proposal, he said, does not address Tehran's concerns or soften Washington’s stance regarding uranium enriched.

If the nuclear talks between Iran and the U.S. fail, this could lead to continued sanctions against Iran. This would limit Iranian oil supply and support oil prices.

The conflict between Russia and Ukraine has continued to fuel supply concerns as well as geopolitical risks.

A wildfire in Alberta, Canada, has caused a temporary shut-down of oil and gas production. This could lead to a reduction in supply.

Wildfires have impacted the production of oil sands by more than 344,000 barrels per day (bpd) in Canada, which is about 7%.

The huge jump in oil prices Monday was mainly due to relief that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, which included Russia, had not increased production more than they did in the two previous months.

In a note, Daniel Hynes said that investors had unwound the bearish positions built up before the weekend's meetings.

(source: Reuters)