Oil picks up after selloff on possible ME ceasefire

LONDON, Nov 26 (Reuters): Oil prices rose on Tuesday, steadying after falling more than $2 a barrel in the previous session on reports of a potential ceasefire between Israel and Lebanon's Hezbollah.

Brent crude futures were up 53 cents, or 0.7 per cent, at $73.54 a barrel as of 1231 GMT. US West Texas Intermediate crude futures were at $69.46 a barrel, up 52 cents, or 0.75 per cent.

Prices fell sharply on Monday after multiple reports that Israel and Lebanon had agreed to the terms of a ceasefire in the Israel-Hezbollah conflict. A senior Israeli official said Israel looks set to approve a US plan for a ceasefire on Tuesday.

Market reaction to the ceasefire news was "over the top" as the broader Middle East conflict has "never actually disrupted supplies significantly to induce war premiums" this year, said senior market analyst Priyanka Sachdeva at Phillip Nova.

A ceasefire in Lebanon would reduce odds of the incoming US administration imposing more sanctions on Iranian crude, said ANZ analysts.

Iran supports Hezbollah and is an OPEC member, producing around 3.2 million barrels per day.

Elsewhere, OPEC+ may consider at its next meeting on Sunday leaving its current oil output cuts in place from Jan. 1. The producer group is already postponing hikes amid global demand worries.

The International Energy Agency expects plentiful oil supplies this year and next unless a major geopolitical escalation occurs, IEA Executive Director Fatih Birol said on Tuesday.

On Monday, US President-elect Donald Trump said he would impose a 25 per cent tariff on all products coming into the US from Mexico and Canada. It was unclear whether this would include crude oil.

The vast majority of Canada's 4 million bpd of crude exports go to the US Analysts have said it is unlikely Trump would impose tariffs on Canadian oil, which cannot be easily replaced since it differs from grades that the US produces.

"Contrary to today's sell-off in risk assets, I think the tariff announcements are actually risk-positive because they are lower than consensus expectations," said market analyst Tony Sycamore at IG.

Trump separately outlined "an additional 10 per cent tariff, above any additional tariffs" on imports from China. It was not entirely clear what this would mean for China as he has previously pledged to slap tariffs on Chinese imports in excess of 60 per cent.