Oil prices climbed again on Tuesday amid concerns that the conflict between Israel and Iran may intensify, raising the risk of further unrest and the potential disruption of oil supply from the key Middle East producing region.
Brent crude futures rose 34 cents, or 0.5%, to $73.57 a barrel as of 3:40 a.m. GMT. U.S. West Texas Intermediate crude was up 29 cents, or 0.4%, at $72.06. Both contracts rose more than 2% earlier in the trading session.
Oil prices settled more than 1% lower on Monday, on hopes that the conflict would ease after media reports that Iran was seeking an end to hostilities.
However, concerns have escalated after U.S. President Donald Trump, in a social media post, urged "everyone" to evacuate the Iranian capital of Tehran.
Entering its fifth day on Tuesday, the fighting has continued with Iranian media reporting explosions and heavy air defense fire in Tehran. In Israel, air raid sirens sounded in Tel Aviv in response to Iranian retaliatory missile strikes.
"The conflict between Iran and Israel is still fresh and brewing, and investor sentiments may still be holding on to the 'war risks,'" Priyanka Sachdeva, senior market analyst at Phillip Nova, said in an email.
"Added volatility and caution ahead of the Fed policy decision are further ensuring higher-paced price reactions in oil," Sachdeva added, referring to the U.S. Federal Open Market Committee (FOMC) meeting, which guides interest rate decisions, that begins on Tuesday.
Still, most of the market is focused on the uncertainty around the Israel-Iran hostilities.
Iran is the third-largest producer among the Organization of Petroleum Exporting Countries (OPEC) members. The concern is that the fighting could disrupt its oil supply and raise prices.
U.S. media on Monday night is reporting that Trump is proposing renewed talks with Iran on a nuclear deal, even as other reports of an incident involving shipping in the Gulf of Oman highlight the risks to companies moving oil and fuel supplies in the region.
