Oil prices edged up on Tuesday amid concerns about possible supply disruptions in the Middle East, but an overall weaker demand outlook pared the gains.

The International Energy Agency (IEA) has said that it will take action to keep global oil markets adequately supplied.

Brent crude LCOc1 futures increased by 12 cents (0.19%) to $63.38 a barrel by 0542 GMT, while West Texas Intermediate (WTI) crude CLc1 futures gained 7 cents at $56.29 per barrel, Reuters reported.

The international benchmark rose by over 1% in the previous session after Iran seized a British tanker last week, leading to fears of supply disruptions from the Gulf and worsening relations between Iran and Britain.

Singapore-based Phillip Futures commodities analyst Benjamin Lu Jiaxuan was quoted by Reuters as saying: “Downward revisions on global oil demand, along with rising challenges in the macroeconomic environment, have capped bullish gains for oil prices.”

The IEA, which is monitoring developments in the Strait of Hormuz, said: “The IEA is ready to act quickly and decisively in the event of a disruption to ensure that global markets remain adequately supplied.”

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By GlobalData

In a statement, the IEA said that the oil market is well supplied and oil production exceeded demand in the first half of 2019, pushing global stocks up by 900,000 barrels per day (bpd).

Since the start of 2019, the Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers, including Russia, have withheld supplies to prop up prices. Hedge funds, producers and traders have taken a bearish approach in response to a reported ‘weakness’ in worldwide demand, contributing to the souring of market sentiment in recent days.

Sydney-based Frame Funds research analyst Harrison Fleming said: “I’m struggling to identify a clear direction at the moment but, I’m becoming increasingly bearish due to non-OPEC supply and softening global demand.

“I don’t see any resolution to the Middle East tensions in the near term…I do see this theme providing more of an excuse for oil to remain trading in a range for the next month or two.”