After moving sharply higher in early trading, the price of crude oil showed a substantial downturn over the course of the trading session on Tuesday.
Crude for February delivery surged nearly $2 to a high of $73.64 a barrel early in the session but pulled back sharply to close down $1.27 or 1.8 percent at $70.38 a barrel.
The price of oil initially spiked amid concerns about escalating Middle East tensions after U.S. helicopters repelled an attack on Sunday by Iran-backed Houthi militants on a Maersk container vessel in the Red Sea.
Iran subsequently announced that it has dispatched a destroyer to the Red Sea, although state media said the Alborz destroyer is operating as part of the flotillas that take part in regular missions in international waters.
Buying interest waned over the course of the session, however, as analysts suggested traders are not convinced the developments will lead to major supply disruptions.
"The market is basically saying 'we will wait and see until something happens,'" Helima Croft, head of global commodity strategy at RBC Capital Markets told CNBC.
