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(Bloomberg) -- Oil fluctuated near a five-month high as progress in ceasefire talks between Hamas and Israel helped cool a rally fueled by risks to Russian and Iranian supplies.

Brent crude retreated slightly below $81 a barrel as Qatar and Hamas said that negotiations with Israel have reached their final stages, building on earlier comments from Donald Trump and Joe Biden. That potentially eases a conflict that has buffeted global oil markets for more than 15 months.

The international benchmark had climbed more than 5% over the previous two sessions, while oil shipping rates surged the most in months on Monday, in response to the measures from Washington targeting about 160 tankers involved in Russian oil trade.

China’s state oil companies and large private refiners are snapping up crude cargoes from the Middle East as they hasten preparations for potential disruption in fuel supply from the unprecedented sanctions.

In Canada, meanwhile, Alberta Premier Danielle Smith warned of possible US tariffs once Donald Trump takes office next week, with no exemptions for oil, after meeting the president-elect in Florida. More than half of US crude imports come from Canada, most of it from Alberta.

Crude has seen a rampant start to the year as the multiplying supply risks deliver a further boost to a market that had already been lifted by falling US stockpiles and colder weather fanning demand.

While the full impact of the latest US sanctions package remains far from clear, it may drive a rerouting of global flows as users across Asia, including refiners in India and China, are forced to reach far and wide for replacement barrels.

“Brent has been on a strengthening path well before the new sanctions,” said Bjarne Schieldrop, chief commodities analyst at SEB AB, adding that “moving higher into the $80s thus seems highly likely following a near-term washout of technical overbought dynamics.”

Some early signs of disruption are already apparent. Among them, a senior Indian bureaucrat told reporters that sanctioned vessels won’t be allowed to discharge, although the country’s state-owned refiners expect Moscow to find workarounds.

Widely tracked metrics point to a fast-tightening market. Brent for prompt delivery was at its wides premium to next-month futures since February of last year, excluding expiry days, while US crude’s equivalent marker was more than $1.50 a barrel, a sign of extreme tightness.

“There is still plenty of uncertainty over how much of an impact the latest US sanctions will have on Russian oil exports,” said Warren Patterson, head of commodities strategy at ING Groep NV. “While they have the potential to wipe out the surplus we expect for this year, the actual volumes lost will likely be more limited as players find ways to circumvent these sanctions.”

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--With assistance from Nicholas Lua.