In a dramatic turn of events, oil prices experienced a rebound in early Tuesday trade, surging as escalating geopolitical tensions in the Middle East fueled concerns over the region's oil supply.

Brent crude futures rose by 0.21% to $82.57 a barrel, while U.S. West Texas Intermediate crude saw an increase of 0.22%, reaching $76.95 a barrel.

The previous day witnessed both contracts tumbling over $1, as a deepening real estate crisis in China, the world's largest crude consumer, raised apprehensions about demand.

A Hong Kong court's decision to order the liquidation of the property giant China Evergrande Group added to the anxiety surrounding the global crude market.

DBS Bank's energy sector team lead, Suvro Sarkar, noted that the current oil prices above $80 per barrel are indicative of a geopolitical risk premium.

The situation in the Middle East, particularly if tensions between the U.S. and Iran escalate, could sustain oil prices in the $80-$100 per barrel range for an extended period.

The United States has vowed to take "all necessary actions" in response to a deadly drone attack in Jordan by Iran-backed militants. This incident marks the first U.S. military deaths since the Israel-Gaza war began, putting financial markets on edge. Analysts are closely watching for potential U.S.-Iran tensions, with concerns over the impact on Iran's vulnerable oil supply, which represents 1-1.5% of global oil output.

Commonwealth Bank of Australia analyst Vivek Dhar highlighted the risk of Iran threatening a blockade of the Strait of Hormuz, a critical transit point for 15-20% of global oil supply. The situation remains fluid, with the direction of oil markets hinging on Iran's response to rising U.S. tensions.

As the geopolitical landscape intensifies, oil markets are also awaiting the Federal Reserve's rate decision. The Federal Open Market Committee (FOMC) is set to begin a two-day meeting on Tuesday. While interest rates are expected to remain steady, some investors speculate that the U.S. central bank might shift its hiking bias, potentially leading to lower interest rates, which could positively impact oil prices and stimulate demand.

Market expectations, as indicated by the CME FedWatch tool, suggest a 47% chance of a Fed rate cut in March, a significant shift from the 88% probability just a month earlier. Meanwhile, U.S. crude oil and distillates inventories are anticipated to have fallen last week, while gasoline stocks are expected to rise, according to a Reuters poll.

The American Petroleum Institute (API) is scheduled to release U.S. stockpile data on Tuesday at 4:30 pm EST, while the Energy Information Administration (EIA) will publish its statistics on Wednesday at 10:30 am EST, shedding light on the current state of the nation's energy reserves.