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(Bloomberg) — Oil held the largest decline in two months amid a slew of conflicting signals that ranged from rising stockpiles to tensions in the Middle East and the reimposition of US sanctions on Venezuelan crude.

Global benchmark Brent traded below $88 a barrel after slumping by 3% on Wednesday, while West Texas Intermediate was near $83. US crude inventories rose by 2.7 million barrels last week, hitting the highest level since last June, while gauges of fuel demand declined.

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The weak US data overshadowed the impact of geopolitical tensions in the Middle East as traders await Israel’s response to Iran’s unprecedented recent attack. At present, there’s a premium of $5 to $10 a barrel baked in, but without fresh escalation, prices may fall, according to Goldman Sachs Group Inc.

US sanctions are in focus. President Joe Biden’s administration has reimposed restrictions on Venezuelan oil, ending a six-month reprieve in a move that may hamper flows from the South American nation. At the same time, a US government official said new sanctions on Iran’s oil could be included in a House foreign aid package that could be brought to vote this week.

Oil remains higher year to date as supply cuts from OPEC+ and geopolitical risks in the Middle East and Russia have combined to aid prices. The run-up had ignited speculation that crude may regain $100 a barrel, although the ascent has now faltered, with some market metrics including timespreads pointing to slightly less tight conditions.

“The market appears to have discounted the possibility of an Israeli retaliation to Saturday’s Iranian attack,” said Vandana Hari, founder of Vanda Insights. The midweek drop suggests “that the latest bout of risk premium from heightened Israel-Iran tensions has eroded,” she said.

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