Oil Steadies as Sverdrup Restart eases Geopolitical Jitters

Oil prices traded steady on Tuesday as Norway's Johan Sverdrup oilfield restarted production and there were reports of Iran offering to cap its uranium stockpile, factors that offset investor concerns about escalation of the Russia-Ukraine war.

Brent crude futures LCOc1 fell 0.1%, or 7 cents, to $73.23 per barrel by 1:30 p.m. EST (1830 GMT). U.S. West Texas Intermediate crude futures CLc1 gained 0.1%, or 5 cents, to $69.21 per barrel.

Equinor resumed partial production from the Johan Sverdrup field in the North Sea, Western Europe's largest oilfield, the day after a power outage there factored in lifting oil prices by over 3%.

"I guess the partial restart of the Sverdrup field is the driver of the setback, as well as a slightly stronger U.S. dollar," said Giovanni Staunovo, analyst at UBS.

The dollar edged up to within striking distance of its one-year high. A strong dollar makes oil more expensive for other currency holders.

Oil prices also came under pressure after confidential reports by the U.N. nuclear watchdog, seen by Reuters, said Iran has offered to stop expanding its stock of uranium enriched to 60% purity, near the roughly 90% of weapons grade.

U.S. crude oil and gasoline stockpiles likely rose last week, even as refineries ran at higher rates, according to an extended Reuters poll of nine analysts. Higher stockpiles are typically an indicator of low demand.

Oil prices drew some support from an ongoing outage at Kazakhstan's biggest oilfield, Tengiz, which has reduced output by 28% to 30% for repairs which the country's energy ministry has said will be completed by Saturday.

Rising tensions between Moscow and Washington over Ukraine also supported the oil market.

For the first time, Ukraine used U.S. ATACMS missiles to strike Russian territory on Tuesday, Moscow said. Russian foreign minister Sergei Lavrov described the attack as a Western escalation. Russian President Vladimir Putin lowered the threshold for a possible nuclear strike.

Investors are wary, said Toshitaka Tazawa, an analyst at Fujitomi Securities, "assessing the direction of the Russia-Ukraine war after the weekend's escalation".