Oil prices support from tighter US sanctions enforcement and rising Middle East tensions.

Oil prices have fortified in early Asian trading, prompted by the interception of a Venezuelan oil tanker by the U.S. and rising tensions between Israel and Iran. The U.S. is reportedly pursuing another Venezuelan tanker, which would mark the third interception in less than two weeks, underscoring a tougher U.S. sanctions enforcement approach. This action raises uncertainties around crude supply from Venezuela, which is already a sensitive factor in the market due to geopolitical disruptions. In addition, tensions in the Middle East further support oil prices, especially as Israel warns that recent missile exercises by Iran could be misinterpreted as preparations for an attack. While U.S. intelligence does not indicate an imminent Iranian strike, the lower risk tolerance following the recent Hamas assault raises concerns about potential escalations and miscalculations. Energy markets are currently factoring in a higher geopolitical risk premium, with traders focused on the possibility that even limited confrontations could disrupt oil flows through the Strait of Hormuz, a vital route for global oil supply. The combination of this Middle Eastern risk and firm U.S. enforcement actions is providing significant support for oil prices, even as broader macroeconomic concerns limit the upside potential.