Oil was slightly firmer on Tuesday, showing the first signs of recovery following a sharp drop on Monday.
WTI Crude was up 0.61%, while Brent was up by 1.02% at the time of writing on Tuesday.
“The main focus for the market has been heightened tensions across the Middle East. Last week, the US and UK responded to Yemeni attacks on shipping by firing back missiles from warships in the Red Sea. The Iran-backed Houthi leadership has promised retaliation,” said David Morrison, senior market analyst at Trade Nation.
Then on Tuesday, “Iran said that it had targeted its own missiles at areas in Iraq and Syria in an act of self-defence to counter terrorism. Crude prices have reacted to the spread of hostilities, but in a muted fashion,” he added.
It can be further noted that, despite the current situation, Middle Eastern oil production remains unthreatened.
“In the meantime, investors are having to calculate if supply will continue to outstrip demand putting downward pressure on prices. This was the overriding driver of price weakness in the fourth quarter of last year. But there is speculation that demand could catch up with supply as we head further into 2024,” added Morrison.