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West Texas Intermediate (WTI) US Oil trades around $60.30 on Tuesday at the time of writing, up 1.60% on the day, extending the recovery seen since the start of the week. Oil prices benefit from renewed risk appetite across energy markets, as the most acute geopolitical concerns fade, making room for fresh supportive factors.

Tensions surrounding Iran have eased over the past few days after rumors of a US strike failed to materialize. This détente lowers the likelihood of US military action that could disrupt exports from a major producer within the Organization of the Petroleum Exporting Countries (OPEC). Even though Iran’s Supreme Leader Ayatollah Ali Khamenei said that several thousand people were killed during recent protests, the Oil market is mainly focused on the reduced risk of a sudden supply shock, which helps stabilize the backdrop and encourages tactical buying in WTI.

At the same time, investors’ attention is shifting toward political and trade developments. US President Donald Trump has threatened to impose an additional 10% tariff on imports from several European countries, including Denmark, Germany and the United Kingdom (UK), from February 1, unless Washington is allowed to buy Greenland. This stance revives fears of a trade conflict between the United States (US) and the European Union, although, for now, the Oil market appears to prioritize short-term factors that are supportive of prices.

According to Janiv Shah, analyst at Rystad Energy, the fading fears around Iran have allowed the market to refocus on broader macroeconomic risks, notably the potential scale of tensions between the United States and Europe. An escalation of trade frictions could weigh on demand over the medium term, but it has not prevented WTI from benefiting from a catch-up move so far.

Traders are also closely watching upcoming US data. The American Petroleum Institute’s (API) weekly Crude Oil inventories report is due later on Tuesday.

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