Oil prices fell 2% on Tuesday, erasing gains from the previous session, as investors watched developments around U.S. tariffs, the war in Ukraine and the potential disruption of Russian fuel supplies.

Brent crude was down $1.58, or 2.3%, at $67.22 a barrel, a day after hitting its highest price since early August. West Texas Intermediate (WTI) crude lost $1.55, or about 2.4%, to $63.25.

"Given the huge amount of uncertainties in the oil market caused by the Ukrainian conflict and the tariff war, investors will remain unwilling to commit themselves to either direction on a prolonged basis," said Tamas Varga, an analyst with PVM Oil Associates.

Brent prices could be bound to a trading range of $65-$74 for the foreseeable future, he added.

Oil's rally on Monday was primarily driven by supply risks after Ukraine strikes on Russian energy infrastructure and the possibility of further U.S. sanctions on Russian oil.

Ukraine's attacks in response to Russia's advances in the conflict and its pounding of Ukrainian gas and power facilities have disrupted Moscow's oil processing and exports and created gasoline shortages in some parts of Russia.

Russia has revised up its crude oil export plan from western ports by 200,000 barrels per day in August from the initial schedule after Ukrainian drone attacks disrupted refinery operations and freed up more crude for shipment, three people familiar with the matter said.

U.S. President Donald Trump has renewed his threat to impose sanctions on Russia if there is no progress towards a peace deal in the next two weeks.

However, sources have told Reuters that U.S. and Russian government officials discussed several energy deals on the sidelines of this month's negotiations to seek peace in Ukraine.

Meanwhile, Indian exports could face U.S. duties of up to 50% - among the highest imposed by Washington.

"Front and center in this week's trade is the possibility that U.S. tariffs on India could be doubled to 50% as early as tomorrow ... further restricting Russian export flows that are already being inhibited by recent Ukrainian attacks on Russian oil refineries," analysts at energy advisory firm Ritterbusch and Associates said in a note.

Source: Investing.com