Oil prices were steady on Tuesday after falling more than 1 per cent the previous day on hopes that the US would ease sanctions on Venezuelan crude exports and as efforts to de-escalate the Israel-Hamas war allayed supply concerns.
Brent, the benchmark for two thirds of the world’s oil, was trading 0.03 per cent higher at $89.68 a barrel at 9.22am UAE time while West Texas Intermediate, the gauge that tracks US crude, was down 0.15 per cent at $86.53 a barrel.
On Monday, Brent settled 1.36 per cent lower at $89.65 a barrel. WTI closed down 1.17 per cent at $86.66.
“Diplomatic efforts have also provided a tentative calm with de-escalating fears of an immediate disruption with global crude supplies,” said Edward Moya, senior market analyst at Oanda.
“This pullback with crude prices doesn’t come with a key catalyst that will prevent this oil market from remaining tight over the short-term.”
Venezuela's government and opposition are set to restart long-suspended talks today.
President Nicolas Maduro has said that these talks would benefit the 2024 election, potentially resulting in the US considering sanctions relief, Reuters reported, citing several sources.
The potential easing of sanctions would allow the country, which has the world’s largest crude reserves, to exports its oil to more markets.
Sanctions were imposed following the re-election of Mr Maduro in 2018.
Last year, American oil company Chevron was allowed to expand its operations in Venezuela and ship crude oil to the US.
US President Joe Biden will visit Israel and Jordan on Wednesday, after warning that a long-term Israeli occupation of Gaza would be a “big mistake”.
More than 2,700 people have been killed in Gaza so far, the majority of whom are women and children. The Hamas attacks on Israel left 1,300 people dead.
The US has been seeking to contain the conflict from spreading in the Middle East. Secretary of State Antony Blinken arrived in Israel on Monday to meet Israeli Prime Minister Benjamin Netanyahu after meetings in Egypt and Saudi Arabia on Sunday.
Last week, oil prices recorded their biggest seven-day gain in a month amid concerns that the Israel-Hamas war would escalate into a broader regional conflict, potentially affecting crude supplies.
“A potential implication of Iran in Gaza would bring a severe disruption to world’s oil supply in the medium run,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“Iran doesn’t want tensions to rise but they say that they can’t sit and watch if Israel enters Gaza,” she said.
Last week, the International Energy Agency slashed its oil demand growth forecast for 2024, citing a “deteriorating economic climate”.
Global oil demand is now expected to expand by about 900,000 barrels per day next year, down from the agency’s previous forecast of a growth of 1 million bpd, the agency said in its monthly oil market report.
However, the agency raised its 2023 demand forecast to 2.3 million bpd, from a previous estimate of 2.2 million bpd, citing “buoyant” demand growth in China, India and Brazil.