Oil prices rose on Tuesday, with analysts saying that uncertainty would keep prices elevated, even as there were no concrete signs of any production losses stemming from the Iran-Israel conflict.
Brent crude futures climbed 82 cents, or 1.1%, to $74.05 a barrel as of 0840 GMT. U.S. West Texas Intermediate crude was up 77 cents, or 1.1%, at $72.54.
Both contracts rose more than 2% earlier in the trading session but also notched declines before bouncing back in volatile trading.
Iran is the third-largest producer among members of the Organization of the Petroleum Exporting Countries and there is widespread concern the fighting could affect exports from there. Additionally, investors are watching for signs shipments through the Straits of Hormuz, through which flows about 19 million barrels per day of oil and oil products, may be impacted.
"The market is largely worried about disruption through Hormuz but the risk of that is very low, said Saxo Bank analyst Ole Hansen.
There is no appetite around closing it since Iran would lose revenue and the U.S. wants lower oil prices and wants to lower inflation, he added.
There have been no signs of supply losses but ships moving in the vicinity of the Strait and the Gulf have been affected by electronic warfare measures that have interfered with navigation systems.
Early on Tuesday, shipping sources said a vessel collided with two other ships sailing near the Strait of Hormuz, highlighting the risks to companies moving oil and fuel supplies in the region.
Despite the potential for disruptions, there are signs oil supplies remain ample amid expectations for lower demand.
In its monthly oil report released on Tuesday, the International Energy Agency revised lower its world oil demand estimate by 20,000 bpd from last month's forecast, while increasing the supply estimate by 200,000 bpd from last month's estimate to 1.8 million bpd.
Investors are also focusing on central banks' interest rate decisions, Tamas Varga, analyst at PVM Associates said in a note, with the U.S. Federal Open Market Committee, which guides the Federal Reserves rate movements, set to meet later on Tuesday.
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Oil prices rose on Monday after the United States clinched a trade deal with the European Union and may extend a tariff pause with China, relieving concerns that higher levies could have hurt economic activity and limited fuel demand.
Oil prices fell below the key $70 per barrel mark last week as increased output from OPEC+ eased supply concerns, while renewed U.S. tariff threats under President Donald Trump weighed on global demand expectations.
Oil prices edged higher on Friday, heading for a small weekly loss, as investors weighed new European Union sanctions against Russia.
Oil prices climbed on Wednesday, maintaining their highest levels since 23 June, lifted by recent attacks on shipping in the Red Sea, along with concerns over steep U.S. tariffs on copper and a forecast for lower U.S. oil production.
European Union leaders have agreed to raise up to €90 billion through joint borrowing to support Ukraine’s defence in 2026 and 2027, opting not to use frozen Russian state assets amid legal and political concerns.
Petroleum products are being transported by rail from Azerbaijan to Armenia for the first time in decades. The move is hailed as a tangible breakthrough in efforts to normalise relations between the long-time rivals.
European Union foreign policy chief Kaja Kallas has warned that attempts to reach a peace agreement in Ukraine are being undermined by Russia’s continued refusal to engage meaningfully in negotiations.
U.S. President Donald Trump delivered a wide-ranging address from the White House in which he sought to highlight what he described as his administration’s achievements while laying the groundwork for his plans for the year ahead and beyond, on Wednesday (18 December).
Chinese Foreign Minister Wang Yi has held a phone conversation with his Venezuelan counterpart Yvan Gil at the latter’s request.
Warner Bros Discovery’s board rejected Paramount Skydance’s $108.4 billion hostile bid on Wednesday (17 December), citing insufficient financing guarantees.
Ford Motor Company said on Monday it will take a $19.5 billion writedown and scrap several electric vehicle (EV) models, marking a major retreat from its battery-powered ambitions amid declining EV demand and changes under the Trump administration.
Iran has rolled out changes to how fuel is priced at the pump. The move is aimed at managing demand without triggering public anger.
U.S. stock markets closed lower at the end of the week, as investors continued to rotate out of technology shares, putting pressure on major indices.
The U.S. Federal Reserve’s Federal Open Market Committee (FOMC) cut its benchmark interest rate by 25 basis points to a range of 3.50% to 3.75% following its two-day policy meeting, according to an official statement issued on Wednesday, 10 December.
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