Oil edged higher as signs OPEC+ will once again delay restoring output countered easing geopolitical risk in the Middle East.

Brent traded above $73 a barrel, after sliding in the prior two sessions on anticipation of a truce between Israel and Hezbollah. OPEC+ talks to delay a production restart have begun ahead of a meeting this weekend, allaying concerns over a supply glut.

Israel started a cease-fire with the Iran-backed militant group after weeks of talks mediated by the US. Oil options markets have begun pricing a lower risk of escalation and hundreds of thousands of bullish calls expired worthless on Tuesday. 

Crude has been caught in a tight range since the beginning of last month, buffeted by competing bullish and bearish signals. There's a number of catalysts that may drive the market's next move — including the policies of a second Trump presidency, geopolitical risks linked to Russian and Iranian supplies next year and OPEC+'s output plans. 

"On one hand OPEC+ appears to be reluctant to unwind given concerns over weak oil demand and market consensus that 2025 looks like a surplus year for oil balances," Citigroup Inc. analysts including Eric Lee wrote in a note. "On the other hand, deeper cuts also seem unlikely, with prices still above $70 Brent, global observable oil inventories relatively low, and some geopolitical risk still in the market."

The American Petroleum Institute reported US crude inventories shrank by 5.9 million barrels last week, which would be the biggest drop since August if confirmed by government figures later Wednesday.

Elsewhere, a Canadian petroleum industry group said that President-elect Donald Trump's proposed tariffs, which may include nearly 4 million barrels of Canadian crude imports, would result in higher gasoline and energy costs for US consumers. 

Brent for January settlement rose 0.3% to $73.05 a barrel at 10:41 a.m. in London.

WTI for January delivery advanced 0.4% to 69.02 a barrel.

Source : Bloomberg