Oil prices rose in early Asian trading on Tuesday, recovering losses from the previous session, as investors continued to assess risks from geopolitical concerns in the Middle East.
Benchmark Brent crude futures rose 39 cents, or 0.5 percent, to $87.39 a barrel by 0033 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose 40 cents, or 0.5 percent, to $82.30 a barrel.
Both benchmarks fell 29 cents in the previous session amid indications that the recent escalation of tensions between Israel and Iran will have little impact on oil supplies from the region in the near term.
However, analysts noted that many risks remain in the oil market. ANZ analysts highlighted the US approval of new sanctions on Iran’s oil sector that expand existing sanctions to include foreign ports, ships and refineries (TADAWUL:2030) that knowingly process or ship Iranian crude.
The geopolitical backdrop is still fraught with a lot of risks at the moment, so we're clearly going to see a lot of volatility until there's more clarity around it, ANZ analysts said in a podcast.
The imminent threat of geopolitical risks spilling over into oil market fundamentals has largely faded, but the overall trend of this risk since October last year is worrying, analysts at Barclays (LON:BARC) said in a note on Monday.
U.S. crude oil inventories are expected to have increased last week while refined product inventories are likely to have fallen, according to a preliminary Reuters poll of analysts.
