Oil prices settled higher on Tuesday, driven by concerns over limited supply from Russia and Iran because of Western sanctions and expected higher Chinese demand.

Brent crude futures settled at $77.05 a barrel, up 75 cents, or 0.98%. U.S. West Texas Intermediate (WTI) crude finished at $74.25 a barrel, up 69 cents, 0.94%.

Traders were looking to the Chinese stimulus plans to drive growth as supplies are tight following the Christmas and New Year's holidays, said Forex market analyst Razan Hilal.

Concern over sanctions tightening supply has translated into increased demand for Middle Eastern oil, reflected in a rise in Saudi Arabia's February oil prices to Asia, the first such increase in three months.

On Monday in China, Shandong Port Group issued a notice banning U.S.-sanctioned oil vessels from its network of ports, three traders said, potentially restricting blacklisted vessels from major energy terminals on China's east coast.

Shandong Port Group oversees large ports on China's east coast, including Qingdao, Rizhao and Yantai, which are major terminals for importing sanctioned oil.

Meanwhile, cold weather in the U.S. and Europe boosted heating oil demand, though oil price gains were capped by global economic data.

Source : Reuters