NEW YORK: Oil prices climbed about 2% on Tuesday to a two-week high as persistent geopolitical tensions between Russia and Ukraine, and the US and Iran looked set to keep sanctions on both Opec+ members Russia and Iran in place for longer.

Brent crude futures rose US$1, or 1.5%, to settle at US$65.63 a barrel, while US West Texas Intermediate (WTI) crude rose 89 cents, or 1.4%, to close at US$63.41.

"Risk premium has ramped up this week as the prospect of a Russia/Ukraine ceasefire as well as an Iranian nuclear deal now appear to have been pushed back for weeks if not months," analysts at energy advisory firm Ritterbusch and Associates said in a note.

Russia said work on trying to reach a settlement to end the war in Ukraine was extraordinarily complex and that it would be wrong to expect any imminent decisions but that it was waiting for Ukrainian reaction to its proposals.

Russia is a member of the Opec+ group that includes the Organization of the Petroleum Exporting Countries and allies, and was the world's second biggest producer of crude in 2024 behind only the US, according to US energy data.

Opec member Iran, meanwhile, was set to reject a US nuclear deal proposal that would be key to easing sanctions on the major oil producer.

Iran was the third biggest producer of crude in Opec behind Saudi Arabia and Iraq in 2024, according to U.S. energy data.

In Canada, wildfires burning in Alberta have affected more than 344,000 barrels per day of oil sands production, or about 7% of the country's overall crude output, according to Reuters calculations.

In Europe, Euro zone inflation eased below the European Central Bank's (ECB) target last month on surprisingly benign services costs, underpinning expectations for further policy easing even as global trade tensions fuel longer-term price pressures.

Central banks like the ECB use interest rates to keep inflation in check. Lower interest rates can spur economic growth and demand for oil by reducing consumer borrowing costs.

But, in the US, Chicago Federal Reserve President Austan Goolsbee said higher inflation from  import tariffs could become evident quickly, but he said it would take longer to see a tariff-induced economic slowdown.

The Organisation for Economic Co-operation and Development (OECD), however, revised down its forecast for global economic growth as the fallout from US President Donald Trump's trade war takes a bigger toll on the US economy.

US job openings increased in April, but layoffs posted their biggest rise in nine months, suggesting that labour market conditions were softening amid a dimming economic outlook because of tariffs.

The US has asked countries to make their best offers on trade negotiations by Wednesday as US officials ramp up efforts to deliver multiple agreements to Trump before a self-imposed deadline just five weeks away.

Analysts forecast energy firms pulled about 1.0 million barrels of crude from US stockpiles last week, reducing inventories for a second week in a row.

That compares with an increase of 1.2 million barrels during the same week last year and an average decrease of 2.3 million barrels over the past five years (2020-2024).

The American Petroleum Institute (API) trade group and the Energy Information Administration (EIA) release weekly US oil inventory data on Tuesdays and Wednesdays, respectively. — Reuters