Oil prices edged up on Tuesday as traders gauged the potential for supply disruptions after US guidance for vessels transiting the Strait of Hormuz kept attention squarely on tensions between Washington and Tehran.
Brent crude oil futures were up 37 cents, or 0.5%, at $69.41 a barrel by 1136 GMT. US West Texas Intermediate crude rose 25 cents, or 0.4%, to $64.61.
"The market is still focused on the tensions between Iran and the US," said Tamas Varga, an oil analyst at brokerage PVM.
"But unless there are concrete signs of supply disruptions, prices will likely start going lower," he said. "The market is range-bound, it's an oversupplied market against geopolitics."
Prices rose more than 1% on Monday, when the US Department of Transportation's Maritime Administration advised US-flagged commercial vessels to stay as far from Iran’s territorial waters as possible and to verbally decline Iranian forces' permission to board if asked.
About a fifth of the oil consumed globally passes through the Strait of Hormuz between Oman and Iran, making any escalation in the area a major risk to global oil supplies.
Iran and fellow OPEC members Saudi Arabia, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, mainly to Asia.
The guidance was issued despite Iran's top diplomat saying last week that Oman-mediated nuclear talks with the US were off to a "good start" and set to continue.
Goldman Sachs analysts wrote in a note on Tuesday that prices were supported by geopolitics, with a pickup in oil on vessels as buyers seek to secure more oil amid heightened uncertainty.
"While talks in Oman produced a cautiously positive tone, lingering uncertainty over potential escalation, sanctions tightening, or supply disruptions in the Strait of Hormuz has kept a modest risk premium intact," said Tony Sycamore, an analyst at IG.
Meanwhile, the European Union has proposed extending its sanctions against Russia to include ports in Georgia and Indonesia that handle Russian oil, the first time the bloc would target ports in third countries, according to a proposal document seen by Reuters.
The move is part of efforts to tighten sanctions on Russian oil, a key source of revenue for Moscow, over the war in Ukraine.
Indian Oil Corp bought six million barrels of crude from West Africa and the Middle East, traders said, as India steered clear of Russian oil in New Delhi's push for a trade deal with Washington, which the countries hope to conclude in March.
