Oil prices rise higher on weaker dollar, prospect of broader oil sanctions on Iran. By Investing.com

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Investing.com — Oil prices rose on Tuesday, buoyed by a dip in the dollar on weaker U.S. economic data and the prospect of tighter global supply amid bets on broader sanctions on Iranian oil exports.

At 2:30 PM ET (18:30 GMT), it rose 1.7% to $88.48 per barrel, while rising $1.46% to settle at $83.36 per barrel after hitting an intraday low of $80.88 had traded.

Oil prices are driving the dollar dip further upwards

The 0.4% drop put pressure on a decline in government bond yields after data showed manufacturing and services activity fell unexpectedly in April, fueling hopes for a rate cut.

Traders now see a 41% change from a July rate cut, compared to about 35% a year earlier.

Because oil is priced in dollars, a lower dollar stimulates demand from foreign, non-dollar buyers.

Stricter sanctions against Iran?

Bets on tighter supply were helped by the US preparing tougher oil export curbs on Iran, even as it remained unclear how strict the US would be as high US gasoline prices have become a contentious issue for the Biden administration.

The US Senate will soon begin considering a foreign aid package that would include sanctions on Iranian oil exports targeting ships, ports and refineries that process Iranian oil.

In addition, EU foreign ministers agreed in principle on Monday to extend sanctions against Iran following Tehran’s missile and drone attack on Israel this month.

Fresh domestic crude oil supply data monitored

After last week’s much larger-than-expected surge in crude inventories, the latest update on weekly US crude oil supply is likely to draw a lot of attention amid expectations that supply will be curbed by rising demand.

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The company is expected to report later Tuesday that weekly crude inventories rose by 1.8 million barrels for the week ended April 19.

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(Peter Nurse, Ambar Warrick contributed to this article.)

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