Oil holds two-day gain as Middle East risks remain in focus

Oil prices held their two-day gain as Middle East tensions centered on Iran, an OPEC member, which added a risk premium to rates.

West Texas Intermediate was above $64 a barrel after increasing 1.7% over the preceding two sessions, while Brent closed near $69.

The US said on Monday that American-flagged vessels should stay as far as possible from Iranian waters when passing through the Strait of Hormuz. The warning came despite signs of progress in nuclear talks between Washington and Tehran.

The Strait of Hormuz is a critical trade artery for Middle East energy shipments that links a slew of producers to global markets, especially in Asia. Tehran has threatened to close the maritime chokepoint during periods of geopolitical tension, though it has never actually followed through.

Crude has pushed higher this year as recurrent geopolitical flare-ups eclipsed concerns a global surplus would lift inventories and weigh on prices. A raft of data this week will give traders fresh insights into market conditions, starting with an update from the official US forecaster later Tuesday.

Washington has amassed a powerful military force in the Middle East, even as it also pursues talks with Tehran over its nuclear ambitions, with an initial round held in Oman last week and more expected. The face-off has spurred concerns that the US may opt to strike targets in Iran, potentially disrupting oil flows. The region accounts for about a third of global supplies.

With inputs from Bloomberg

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