Tighter market conditions, coupled with geopolitical risk percolating in the Middle East, rekindled a rally Tuesday in the price of crude oil.

Col. Turku al-Maliki, spokesman for the Saudi-led coalition against Yemen, accused Iran of supporting terrorist organizations in Yemen to the detriment of international security. The government in Riyadh said missiles fired by the Houthi rebel group in Yemen, which has Iranian support, struck several targets in Saudi Arabia during the weekend.

Maliki said Tuesday that coalition forces would take all measures necessary to protect Saudi Arabia. Iran, he was quoted by the official Saudi Press Agency as saying, is like "an appendicitis in the body of the world and must reform itself or the world will reform the Iranian situation."

The Saudi pressure on Iran comes as U.S. President Donald Trump stacks his bench of advisors with officials who have a hawkish stance on Tehran. The appointment of John Bolton as Trump's national security advisor was seen as an indication that U.S. support for a nuclear agreement that lets Iranian oil flow in the European markets is over.

Crude oil prices resumed their upward trajectory on Tuesday after dropping in the Monday session in response to an easing of U.S.-China trade war fears. The price for Brent crude oil, the global benchmark, was up 0.6 percent as of 9:20 a.m. EST to $69.94 per barrel. The U.S. benchmark, West Texas Intermediate, was up 0.5 percent to $65.88 per barrel.

The jump comes amid unconfirmed reports of a proposal for members of the Organization of Petroleum Exporting Countries to limit production for as long as a decade. Oil prices jumped briefly more than 1 percent on the news before cooling off.

Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in market commentary emailed to UPI that oil supplies in Cushing, Okla., the main U.S. storage hub, likely swelled last week by as much as 2 million barrels.

"The increase and the fact that some of the geopolitical concerns did not actually blow up into a supply disruption over the weekend led to a correction in the oil price," he said. "Still, with refining margins on the rise and a tightening global oil market, a one-week build will not be enough to break the oil market's upward momentum."

Broader markets may react throughout the day to a series of key U.S. economic data. The S&P Case-Shiller House Price Index showed gains in the U.S. housing sector continuing.

"While price gains vary from city to city, there are few, if any, really weak spots," David M. Blitzer, the chairman of the Index Committee at S&P Dow Jones indices, said in a statement. "Despite limited supplies, rising prices, and higher mortgage rates, affordability is not a concern."

A gauge of U.S. consumer confidence is out about a half hour after the market opens. A February reading from The Conference Board found most U.S. consumers' expectations "remain quite favorable" about the economy, despite this year's stock market volatility.

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Oil prices search for clear direction after last week's big rally
Washington (UPI) Mar 26, 2018
Oil prices were stuck in a tug-of-war of competing narratives early Monday, with U.S. trade and production, alongside Middle East risk, influencing markets. Crude oil prices rallied about 8 percent last week, largely on geopolitical risk, as U.S. President Donald Trump surrounded himself with more hawkish advisors. The appointment of former U.N. Ambassador John Bolton as his national security advisor put war on the tongue of many analysts given his support for pre-emptive strikes on North Korea ... read more