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March Brent crude futures, which are due to expire on Wednesday,
rose 8 cents, or 0.1%, to $82.48 a barrel by 1059 GMT. The more
active April contract rose 13 cents, or 0.2% to $81.96. U.S.
West Texas Intermediate crude was up 24 cents, or 0.3%, at
$77.02 a barrel.
Both contracts fell more than $1 on Monday as a deepening real
estate crisis in China fuelled worries about demand the world's
biggest crude consumer, after a Hong Kong court ordered the
liquidation of property company China Evergrande Group.
Meanwhile, Washington vowed to take "all necessary actions" to
defend its troops following a deadly drone attack in Jordan by
Iran-backed militants, the first U.S. military deaths since the
Israel-Gaza war began, putting markets on edge.
"If U.S.-Iran tensions escalate, particularly through a direct
confrontation, the risk rises that Iran's oil supply is
adversely impacted," said Commonwealth Bank of Australia analyst
Vivek Dhar. "Iranian oil exports are likely the most vulnerable
via potentially greater enforcement of sanctions."
Iran exported 1.2-1.6 million barrels per day of crude oil
through most of 2023, Dhar added, representing 1-1.5% of global
oil supply.
Limiting the gains, however, were concerns about the outlook for
China's economy, and any potential fall out from Evergrande's
liquidation order, analysts said.
"[The] ramifications of a possible collapse in China's property
sector makes moot any authority stimulus and will have very
negative global shockwaves," PVM analyst John Evans said.
On the supply side, while an OPEC+ meeting on Feb. 1 was
unlikely to see a decision on the oil policy the group's oil
policy for April, analysts are hoping it could still shed some
light on production plans.
Aramco, the state oil company of the world's biggest producer
Saudi Arabia, in an indication for the future demand outlook,
said it had received a directive from the energy ministry to
maintain its maximum sustainable capacity at 12 million barrels
a day, and not to continue increasing it to 13 million barrels
per day.
"It may be to save money. But most likely it implies that it
sees no need for this extra oil in the global market," said SEB
analyst Bjarne Schieldrop.
(Additional reporting by Emily Chow and Trixie Yap. Editing by
Jane Merriman)
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