Crude oil futures fell more than 4% on Tuesday as boosted by heightened geopolitical risks stalled as markets awaited signals from Israel to strike back against Iran.
According to Tamas Varga, an analyst at oil broker PVM said oil prices could continue to rise for a long period of time based on perceptions even if not from supply disruptions.
Meanwhile, oil prices have surged more than 7% since Iran fired about 180 ballistic missiles at Israel last week, raising fears that energy infrastructure targets will be targeted.
Previously, Joe Biden publicly disagreed for Israel to attack Iran's infrastructure areas. Israel is likely to attack military and intelligence sites in Iran first.
The Jerusalem Post also reported that Israel is expected to focus on military and intelligence facilities.
Israeli Defense Minister Yoav Gallant is scheduled to meet with US Defense Secretary Lloyd Austin at the Pentagon on Wednesday to further discuss security developments in the Middle East.
Markets were also disappointed that Chinese officials did not announce any new stimulus plans at Tuesday's press briefing.
Before the recent uptick in the Middle East, markets were weighed down by bearish sentiment following weak demand in China, the world's largest importer of crude oil, and concerns that oil supply will outstrip demand in 2025.
