Oil prices rise as Iran suspends cooperation with UN nuclear watchdog

Oil futures edged up on Wednesday as Iran suspended cooperation with the U.N. nuclear watchdog and markets weighed expectations of more supply from major producers next month while the U.S. dollar softened further.

Brent crude added 92 cents, or 1.4 per cent, to $68.03 a barrel at 1125 GMT, while US West Texas Intermediate crude rose 89 cents, or 1.4 per cent, to $66.34 a barrel.

Brent has traded between a high of $69.05 a barrel and low of $66.34 since June 25, as concerns of supply disruptions in the Middle East producing region have ebbed following the ceasefire between Iran and Israel.

Iran put into effect a law on Wednesday that stipulates that any future inspection of its nuclear sites by the International Atomic Energy Agency needs approval by Tehran's Supreme National Security Council. The country has accused the institution of siding with Western countries and providing a justification for Israel's air strikes.

"The market is pricing in some geopolitical risk premium from Iran's move on the IAEA," said Giovanni Staunovo, commodity analyst at UBS. "But this is about sentiment, there are no disruptions to oil."

Planned supply increases by the Organization of the Petroleum Exporting Countries and its allies including Russia, know as OPEC+, appear already priced in by investors and are unlikely to catch markets off-guard again imminently, said Phillip Nova senior market analyst Priyanka Sachdeva.

Four OPEC+ sources told Reuters last week the group plans to raise output by 411,000 barrels per day next month when it meets on July 6, a similar amount to hikes agreed for May, June and July. 

"We are all talking about additional supply coming to the market, but the supply has not really hit the market," Staunovo said. "Probably because it's being consumed domestically."

Saudi Arabia lifted shipments in June by 450,000 bpd from May, according to data from Kpler, its highest in more than a year. However, overall OPEC+ exports are relatively flat to slightly down since March, Staunovo said. He expects this to persist over the summer as hot weather drives higher energy demand.

The greenback continued to weaken, falling to a 3-1/2-year low against major peers earlier on Wednesday. A weaker dollar tends to support oil prices, as it could boost demand for buyers paying in other currencies.

U.S. non-farm payrolls data due on Thursday will shape expectations around the depth and timing of interest rate cuts by the Federal Reserve in the second half of this year, said Tony Sycamore, analyst at IG.

Lower interest rates could spur economic activity which would in turn boost oil demand.

Official U.S. oil stockpile data from the Energy Information Administration is due Wednesday at 10:30 a.m. ET.

American Petroleum Institute data late on Tuesday showed US crude oil inventories rose by 680,000 barrels in the past week at a time when stockpiles typically draw amid the summer demand season, sources said.