Oil prices rose on Tuesday after falling in the previous session as investors continued to assess risks from geopolitical concerns in the Middle East.
Global benchmark Brent crude oil futures were up 27 cents at $87.27 a barrel as of 03:08 GMT. WTI crude oil futures rose 26 cents to $82.16 a barrel.
Both benchmarks fell 29 cents in the previous session on signs that the recent escalation of tensions between Israel and Iran is having little short-term impact on oil supplies from the region.
The loosening of the geopolitical risk premium has driven crude oil prices lower recently as supply has not been meaningfully disrupted. However, the geopolitical landscape remains critical in guiding crude oil prices.
While there are no serious signs of a full-scale war between the countries involved any time soon, any increase in tensions could quickly reverse the current trend.
The United States has approved new sanctions on Iran’s oil sector, expanding existing sanctions to include foreign ports, ships, and refineries that knowingly process or transport Iranian crude oil.
EU foreign ministers also said on Monday they had agreed in principle to expand sanctions against Iran following Tehran’s missile and drone attack on Israel.
Since the geopolitical backdrop is still fraught with many risks at the moment, we may see a lot of volatility until there is more clarity.
Investors are waiting for the release of the U.S. gross domestic product figures and the March personal consumption expenditure data – the Fed’s preferred inflation gauge – later this week to assess the trajectory of monetary policy.
U.S. crude oil inventories were expected to rise last week while refined product inventories were expected to fall, according to a survey.
Sticky US inflation numbers, hawkish statements from leading Fed officials and rising US inventories are weighing on crude oil price growth.
