NEW YORK: Oil prices rose on Tuesday on concerns supplies could become tight due to Ukraine-Russia tensions, threats to infrastructure in the United Arab Emirates and OPEC+ struggling to hit its targeted monthly output increase.
Analysts noted that oil price rise came despite a drop in equities markets and the possibility of an interest rate hike by the US Federal Reserve on Wednesday.
Brent futures rose $1.14, or 1.3%, to $87.41 a barrel by 10:56 a.m. EST (1556 GMT), while US West Texas Intermediate (WTI) crude rose $1.21, or 1.5%, to $84.52.
"The oil complex is advancing on continued supply tightness and geopolitical risk, but the decline in equities and strong dollar are bearish," Jim Ritterbusch, president of energy advisory firm Ritterbusch and Associates, said in a note.
The United States is in talks with major energy-producing countries and companies around the world over a potential diversion of supplies to Europe if Russia invades Ukraine, senior Biden administration officials said.
Russia said it was watching with great concern after the United States put 8,500 troops on alert to be ready to deploy to Europe in case of an escalation in the Ukraine crisis.
In the Middle East, Yemen's Iran-aligned Houthi movement launched a missile attack on Monday on a United Arab Emirates base hosting the US military. The attack was thwarted by US-built Patriot interceptors, US and Emirati officials said.
Also fuelling supply concerns is the difficulty encountered by OPEC+, which comprises the Organization of the Petroleum Exporting Countries along with Russia and other producers, with efforts to hit its targeted monthly output increase of 400,000 barrels per day.
Lower US oil inventories are also providing support, with crude stocks at Cushing, Oklahoma, at their lowest for the time of year since 2012.
The market is waiting for US inventory reports from the American Petroleum Institute (API), an industry group, on Tuesday and the US Energy Information Administration (EIA) on Wednesday.
Analysts expect the latest weekly US oil inventory data will show a 400,000-barrel draw from crude stocks.