Oil prices rose slightly on Tuesday as investors reacted cautiously to signs of potential progress toward easing tensions in the Middle East.

Brent crude and U.S. West Texas Intermediate both posted modest gains after earlier declines linked to a U.S. license allowing limited Iranian oil activity.

Concerns remain that Iran could use oil revenues to rebuild its military, though U.S. officials emphasized restrictions on how funds should be used.

Despite conflicting signals, including reports about the Strait of Hormuz and ongoing diplomatic talks, markets showed growing optimism that the conflict may be easing, CNBC has reported.

Analysts said the price movement suggests expectations of reduced geopolitical risk and less inflation pressure from energy costs.