U.S. crude fell to the lowest levels since early 2021 on Tuesday, as traders see a potential peace agreement in Ukraine bringing Russian crude back to a well supplied market. But President Donald Trump's pressure campaign against Venezuelan President Nicolas Maduro has lifted prices from those lows.

US President Donald Trump has said he is ordering a "a total and complete" blockade of all sanctioned oil tankers going into and out of Venezuela.

“Venezuela is completely surrounded by the largest Armada ever assembled in the History of South America,” he wrote on social media.

West Texas Intermediate oil fell below $55 a barrel for the first time since February 2021 on signs that supply is outpacing demand, while progress in Ukraine peace talks could lead to a deal that may allow more Russian oil to flow onto global markets.

Oil prices fell on Tuesday, adding to the previous session's losses, as prospects for a Russia-Ukraine peace deal appeared to strengthen, raising expectations of a potential easing of sanctions.

Signs of weakness are proliferating across the supply side of the oil market, with Middle Eastern crude prices entering a bearish pattern known as contango early on Tuesday.