West Texas Intermediate crude futures settled at two-week highs while Brent crude futures hit their highest levels since 2014 as Wall Street grew increasingly concerned over possible military actions in the Middle East.
Brent crude futures rose $2.56 to $71.21 a barrel, a 3.7 percent gain, by 3:12 p.m. EDT. U.S. West Texas Intermediate (WTI) crude futures rose $2.09 to settle at $65.51 a barrel, a 3.3 percent gain.
Geopolitical concerns elevated crude prices on Tuesday after President Donald Trump canceled his scheduled trip to multiple South American countries to focus on the U.S. response to developments in Syria.
The president met with military officials in the White House Monday to discuss the administration's response to an alleged chemical weapons attack carried out by Syrian President Bashar Assad's government against its own people.
But future U.S. involvement in the Middle East could interrupt crude supply chains and make it difficult for producers to ship overseas, sparking a bid for oil on Tuesday. Adding to the tensions, Saudi Crown Prince Mohammed bin Salman said Tuesday that the country could be a part of an international response to the Syrian violence, Reuters reported.
"There are headlines of a U.S. carrier group heading to the Middle East, the Saudis are looking for $80 Brent crude, and this is ahead of API inventories," said Roberto Friedlander, head of energy trading at Seaport Global Securities. The "market [also] bounced this morning after the Chinese president's more dovish comments on the trade war."
Shares of major energy stocks surged alongside crude. The Energy Select Sector SPDR Fund (XLE) traded nearly 3.9 percent higher, on pace for its best day since Nov. 30, 2016.
President Xi Jinping promised on Tuesday to open China's economy further, lower import tariffs on cars and better enforce international laws governing intellectual property. Xi's comments likely sought to temper growing trade tensions between Washington and Beijing, which have been announcing tit-for-tat tariffs over the past two weeks.
Both equity and oil markets rallied after the speech, while supposed safe havens such as U.S. Treasurys and gold slipped, supporting Wall Street's thesis that a trade war between the economic superpowers is increasingly unlikely.
Oil prices also traded higher Tuesday amid a report from Bloomberg News, which said that Saudi Arabian officials were seeking $80 a barrel on Brent crude to support the valuation of its energy giant, Aramco, before its initial public offering.
Also helping were comments from Saudi Energy Minister Khalid al-Falih, who said oil cartel OPEC will continue to steward the market. The minister said he would seek an extension to the OPEC–Russia deal, which expires in December.
The report comes a week after Crown Prince Mohammed first told Time magazine that he expected Aramco's public launch to coincide with higher oil prices.
"We believe oil prices will get higher in this year and also get higher in 2019, so we are trying to pick the right time," the prince told Time in reference to the IPO. While Riyadh initially targeted the IPO for the second half of 2018, the Saudis are now forecasting the launch for 2019.
— CNBC's Patti Domm & Gina Francolla contributed to this report.