Oil Prices Stabilize as Russia-Ukraine Peace Hopes Fade, Yemen Tensions Rise

Oil prices were little changed on Tuesday as investors took stock of dented hopes of a Russia-Ukraine peace deal and rising geopolitical tensions in the Middle East around Yemen.

Brent crude futures for February delivery, which expire on Tuesday, were up 27 cents, or 0.4%, at $62.21 a barrel at 1426 GMT.

U.S. West Texas Intermediate crude gained 36 cents, or 0.6%, to $58.44.

The Brent and WTI benchmarks settled more than 2% higher in the previous session as Saudi Arabia launched airstrikes against Yemen and after Moscow accused Kyiv of targeting a Russian presidential residence, denting hopes of a peace deal.

Russia has said it will toughen its position in peace talks after accusing Kyiv of attacking the residence, an allegation that Kyiv dismissed as baseless and designed to undermine peace negotiations.

"I guess the market has now adapted again its expectation, not looking for any breakthrough for a peace agreement between Ukraine and Russia in the short term," said UBS analyst Giovanni Staunovo.

The ongoing U.S. blockade of Venezuelan oil and suspension of Caspian CPC Blend exports because of poor weather supported prices on Tuesday, he said.

Adding to supply concerns were strikes by a Saudi Arabia-led coalition on what it described as foreign military support to UAE-backed southern separatists in Yemen.

Saudi Arabia said on Tuesday that its national security was a red line and backed a call for UAE forces to leave Yemen within 24 hours, shortly after a Saudi-led coalition carried out an airstrike on the southern Yemeni port of Mukalla.

The UAE said it was disappointed with Saudi Arabia's statement and surprised by the airstrikes on Mukalla.

The UAE's Defence Ministry said later on Tuesday it has voluntarily ended the mission of its counterterrorism units in Yemen, the only remaining forces it has in the country after ending its military presence in 2019.

Traders also watched other Middle East developments after U.S. President Donald Trump said that the United States could support another major strike on Iran were Tehran to resume rebuilding its ballistic missile or nuclear weapons programmes.

Despite renewed fears of potential supply disruptions, perceptions of an oversupplied global market remain and could cap prices, analysts say.

Prices are likely to trend downwards in the first quarter of 2026 because of a "growing oil glut", said Marex analyst Ed Meir.

(Reuters)