Brent holds near $114 a barrel as Middle East tensions rage on

Brent crude futures retreated on ​Tuesday but held near $114 a barrel following fresh hostilities in the Middle East, while investors ‌monitored developments in the U.S.-Israeli conflict with Iran, Reuters reported.

The U.S. and Iran launched new attacks in the Gulf on Monday as they wrestled for control over the Strait of Hormuz with duelling maritime blockades, shaking a fragile truce.

Brent crude futures eased 93 ​cents, or 0.8%, to $113.51 per barrel at 0719 GMT after settling up 5.8% on Monday. ​U.S. West Texas Intermediate (WTI) crude fell $2.16, or 2%, to $104.26, after gaining 4.4% in the ⁠previous session.

Prices continue to trade in a highly volatile range, driven largely by ongoing tensions in the ​Strait of Hormuz," said Phillip Nova's senior market analyst Priyanka Sachdeva.

"While prices have eased slightly in recent ​sessions, this is not due to any real improvement in fundamentals, but rather a temporary relief after the U.S. launched 'Project Freedom'," she added.

The U.S. on Monday launched a new operation aimed at reopening the strait to shipping. Maersk (MAERSKb.CO), opens new tab later said the ​Alliance Fairfax, a U.S.-flagged vehicle carrier, exited the Gulf via the strait accompanied by the U.S. military.

It shows ​that limited safe passage is possible under current conditions and helps chip away at some of the worst-case supply disruption ‌fears," ⁠said Tim Waterer, chief market analyst at KCM Trade in an email.

"However, it's still very much a one-off event rather than a full reopening," he added.

Still, Iran launched attacks in the Gulf on Monday to counter U.S. moves for control over the Strait of Hormuz, which connects the Gulf to wider markets and typically ​carries oil and gas ​supply equal to about ⁠20% of global demand every day.

Several commercial vessels were reportedly struck in the area, while a key oil port in the United Arab Emirates was set ablaze ​after an Iranian strike. Trump's attempt to use the U.S. Navy to ​free up shipping ⁠is the war's biggest escalation since a ceasefire was declared four weeks ago.

"Markets may find some relief today following President Trump's overnight comments suggesting the conflict could continue for another two to three weeks," said ING ⁠analysts in ​a client note.

However, there is considerable scepticism in the market ​on this view, given the recent escalation and the repeated extensions of projected timelines for ending hostilities since the conflict began, they ​added.