Tehran has warned U.S. allies in the Middle East that if Washington launches an attack on Iran, it will strike U.S. military bases located within those countries. Some personnel have reportedly been advised to evacuate a U.S. military base in Qatar.

Brent crude futures rose by $1.05, or 1.05%, settling at $66.52 per barrel.

West Texas Intermediate (WTI) crude futures for February delivery on the New York Mercantile Exchange increased by $0.87, or 1.42%, closing at $62.02 per barrel.

Jorge Montepeque, Managing Director of Onyx Capital Group, stated, "We are in a period of geopolitical instability and potential supply disruptions. The protests in Iran are seen as potentially leading to regime change—which is a significant event—and the likelihood of a U.S. attack also appears to be increasing."

U.S. President Donald Trump on Tuesday called on the Iranian people to continue protesting, declaring that "help is on the way," though he did not specify the nature of this assistance.

Analysts at Citigroup noted in a report, "Protests in Iran could tighten the global oil supply-demand balance through short-term supply losses, but the primary impact is reflected in rising geopolitical risk premiums." Consequently, they raised their three-month Brent crude price forecast to $70 per barrel.

However, the Citigroup analysts also pointed out that, so far, the protests have not spread to Iran's main oil-producing regions, meaning the actual impact on oil supply remains limited.

Additionally, data released by the American Petroleum Institute (API) on Tuesday evening showed a substantial increase in U.S. crude and refined product inventories, which also restrained further gains in oil prices.

According to market sources, crude inventories in the United States, the world's largest oil consumer, increased by 5.23 million barrels in the week ending January 9; gasoline stocks rose by 8.23 million barrels, while distillate fuel inventories increased by 4.34 million barrels compared to the previous week.

Official inventory data from the U.S. Energy Information Administration (EIA) will be published later on Wednesday. A Reuters survey on Tuesday indicated that analysts generally expect U.S. crude inventories to have fallen last week, while gasoline and distillate stocks are projected to have risen.

Separately, OPEC member Venezuela has begun reversing previously implemented oil production cuts under U.S. sanctions and is resuming crude exports. Three sources stated that two very large crude carriers (VLCCs) departed from Venezuelan waters on Monday, each loaded with approximately 1.8 million barrels of crude oil. These shipments are likely the first under a potential 50-million-barrel crude supply agreement between Caracas and Washington, aimed at restarting oil exports following the U.S.-forced removal of Venezuelan President Nicolás Maduro.