Investing.com - Oil prices remained relatively stable in early Asian trading on Wednesday, as worries about potential supply disruptions due to the ongoing conflict between Israel and Hamas began to subside.
By 2:20am GMT, Brent crude added 0.3% while U.S. West Texas Intermediate crude edged up by 0.2%. Both Brent and WTI had seen a surge of more than $3.50 on Monday due to fears that the military conflict could expand beyond Gaza, but prices settled lower in Tuesday's session.
Although Israel's contribution to crude oil production is minimal, the market has been concerned that an escalation of the conflict could disrupt Middle East supply, potentially exacerbating an anticipated deficit for the remaining part of the year.
U.S. officials have implicated Iran in the Hamas attack on Israel, but substantial evidence supporting Iran's involvement has yet to emerge. The political risk associated with the situation has prevented crude prices from declining further.
Israel has reported significant damage to parts of Gaza in response to the Hamas attacks. Furthermore, powerful armed groups in Iraq and Yemen, known to align with Iran, have threatened to target U.S. interests with missiles and drones should the U.S. intervene in support of Israel.
However, in a positive development for oil supply, Venezuela and the U.S. have made progress in negotiations that could potentially alleviate sanctions on Caracas. This agreement would permit at least one more foreign oil company to accept Venezuelan crude oil under certain conditions, offering some relief to the global oil supply.