Investing.com-- Oil prices fell in Asian trade on Tuesday, extending recent losses after reports suggested that the U.S. could potentially relax its sanctions on Venezuela’s oil industry.

A lack of immediate escalation in the Israel-Hamas war also spurred bets that the conflict will not spill over into the broader Middle East region, as U.S. officials said that Israel had agreed to provide aid to Gaza. President Joe Biden is also set to visit Israel on Wednesday, Secretary of State Antony Blinken said. 

While the move pushed up some hopes over a deescalation in the Israel-Hamas war, it also dented bets over disruptions in Middle Eastern oil supply- a notion that had boosted oil prices since the onset of the conflict earlier in October. 

This, coupled with reports of potential sanctions relief for Venezuela, spurred steep losses in oil prices on Monday. Prices extended losses into early Asian trade on Tuesday.

Venezuela reportedly restarting opposition talks

Reuters reported on Monday, citing multiple sources, that Venezuela’s government and the opposition plan to resume long-suspended talks on Tuesday- a move that could eventually see Washington relax its sanctions on the country. 

Any U.S. action is only expected after President Nicolas Maduro commits to a presidential election date, as well as lifting bans on opposition candidates, the Reuters reports said.

While it was unclear when such a scenario will play out, any relaxing of sanctions against Venezuela’s energy sector frees up oil exports from the country- a move that could help ease tight global crude markets.

Still, analysts said that while the country could ramp up exports from its massive oil reserves, oil production in Venezuela is expected to remain depressed due to poorly maintained infrastructure and dismal capital spending in the sector. 

Exports from Venezuela are also unlikely to fill the supply deficit caused by steep production cuts from Saudi Arabia and Russia this year. 

Israel-Hamas war in close focus

Markets were also watching for any new developments in the Israel-Hamas war, although traders appeared convinced that it would not draw in other Middle Eastern countries for the time being. 

But the conflict still could escalate, as Israel prepares a large-scale ground invasion of Gaza. The country has also maintained its pace of air strikes against the region, after a series of deadly strikes on Israeli border towns by the terrorist group Hamas. 

Expectations of an escalation in the conflict had driven sharp gains in oil prices last week, as markets bet that the involvement of any more nations, particularly Iran, could disrupt oil supplies in the region. 

Still, in a move that could herald some deescalation, Israel and the U.S. agreed to let aid into Gaza.