Oil prices rebound amidst Israel's  relentless Gaza attacks

Oil prices have risen, recovering some of the previous day's losses, as investors remained nervous that the Israel-Hamas war could escalate into a wider conflict in the oil-exporting region, causing potential supply disruptions.

Brent crude futures climbed 57 cents, or 0.6%, to $90.40 a barrel by 0321 GMT, while US West Texas Intermediate crude futures increased 54 cents, or 0.6%, to $86.03 a barrel.

"The market is up on an adjustment after a drop in the past two sessions and on nagging fears of possible supply disruptions in the Middle East," said Yuki Takashima, economist at Nomura Securities.

Both benchmarks fell more than 2% on Monday as diplomatic efforts in the Middle East, the world's biggest oil-supplying region, intensified to contain the conflict between Israel and Hamas, easing investor worries about supply disruptions.

"We expect WTI to move within the $80-$90 range for a while, with all eyes on the situation in Israel and Gaza, OPEC production, and the pace of demand recovery in China," Takashima said, adding investors were also focusing on US inventory data.

Israel intensifies attacks

Hamas on Monday said it had freed two Israeli women who were among the more than 200 hostages taken during its Oct. 7 offensive in southern Israel, while sources said the US had advised Israel to hold off on a ground assault in the besieged Gaza.

But Israel continued and intensified its bombardment of Gaza on Monday after launching air strikes over southern Lebanon overnight.

"The Israel-Hamas situation remains highly fluid and clearly, the market remains divided over whether the conflict will continue to ease from here as Hamas continues to release hostages or flares up again," said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Israel pounded hundreds of targets in Gaza from the air on Monday, where deaths are soaring and civilians are trapped in harrowing conditions.