Oil prices stabilised today after slumping around 7% in the previous session amid a broader market retreat led by concerns about rising Covid-19 infections, which came just as producers inked a new supply deal.

Brent crude gained 70 cents, or 1%, to $69.32 a barrel by 0651 GMT. The US crude contract for August delivery, which expires later on Tuesday, was up 86 cents, or 1.3%, at $67.28 a barrel. US crude for September delivery was up around 1.2% at $67.14 a barrel.

The selloff, which pushed prices to their lowest in two months, was driven by concerns about the Delta variant of the coronavirus that is rampaging through populations, analysts said, with equities falling and bonds rising.

"Rising cases of the Delta variant of the coronavirus in some Asian and European countries and possibilities of travel restrictions have increased crude oil demand uncertainty to some extent," analysts at ING Economics said in a note.

"However, the crude oil physical market has been tight over recent months, with the ongoing economic recovery likely to remain supportive for oil demand over the second half of the year," they said.

The Delta variant, which is significantly more contagious than earlier ones, is now the dominant strain worldwide, US officials said on Friday.

It has been detected in about 100 countries around the world and patchy rollouts of inoculation programmes in many places are undermining the battle against the virus, raising the prospect of more lockdowns that would hit demand for oil products.

Still, analysts said high frequency indicators showed that restaurant bookings over the weekend in the United States, the world's biggest oil consumer, were at pre-Covid levels, while domestic flights were at the highest level since the pandemic started.

Oil was also hit after the Organization of the Petroleum Exporting Countries (OPEC) and allies, called OPEC+, reached a compromise on Sunday to increase output.

The OPEC+ deal takes away more of the supply curbs that buttressed the market for a year. OPEC+ is keeping about 5.8 million crude barrels per day (bpd) out of the market, a figure that will decrease by 2 million bpd by the end of 2021.

Despite the latest Covid-19 concerns and crude price falls, some analysts expect the increased supplies to be soaked up by a gradual return of economic activity.

"This deal should provide some stability to the market over the coming months .., and may ultimately support the market higher," SSY Futures in Singapore said in a note.