Oil prices posted slight losses in early Asian trade on Tuesday as traders booked profits after prices hit their highest levels in more than a month on Monday amid fears the Middle East could be on the brink of all-out war.
Fighting intensified in the Middle East after the Lebanese Hezbollah group fired rockets at Haifa, Israel's third-largest city, on Monday, as Israel appeared to be preparing to expand its ground incursion into southern Lebanon a year after a Hamas attack on Israel sparked the ongoing war in Gaza.
Update prices
Brent crude futures fell 23 cents, or 0.3 percent, to $80.70 a barrel by 0029 GMT. U.S. West Texas Intermediate (WTI) crude futures fell 20 cents, or 0.3 percent, to $76.94 a barrel, according to Reuters data.
Crude oil futures jumped more than 3 percent on Monday to their highest since late August, extending last week's rally that saw the contract rise more than 8 percent in its biggest weekly gain in more than a year.
Prices began to rise after Iran launched a missile attack on Israel on October 1. Israel has vowed to respond and said it is considering its options and sees Iranian oil facilities as a potential target.
However, some analysts believe an attack on Iran's oil infrastructure is unlikely, and note that oil prices could face significant downward pressure if Israel focuses on any other target.
Analysts at ANZ bank noted on Friday that even if an attack targeted Iranian oil facilities, there is 7 million barrels per day of spare supply capacity within the Organization of the Petroleum Exporting Countries (OPEC) to compensate for the loss of its oil production.
Meanwhile, Hurricane Milton has strengthened to a Category 5 storm as it heads toward Florida after forcing at least one oil and gas platform in the U.S. Gulf of Mexico to shut down on Monday.
U.S. crude oil inventories are expected to rise by 1.9 million barrels in the week to Oct. 4, according to a preliminary Reuters poll.
The American Petroleum Institute is due to release its report on US inventories at 2030 GMT on Tuesday, followed by the official report from the Energy Information Administration at 1430 GMT on Wednesday.
