Oil edges higher in early Asian trade amid lingering tensions in the Middle East, which could lead to more supply disruptions. The U.A.E. said that it was cutting all economic ties with Iran after it accused it of firing ballistic missiles at its territory, ANZ Research analysts note in a research report.

While the U.A.E.'s energy infrastructure was not targeted, the analysts say the move closes another potential avenue for diplomatic efforts to end the conflict and reopen the Strait of Hormuz. The strait is a key waterway through which one-fifth of the world's oil is transported, making it a critical chokepoint for global energy markets.

Front-month WTI crude oil futures are 0.1% higher at $85.88 a barrel, as traders weigh the geopolitical risk premium against broader demand concerns. The uptick reflects persistent anxiety over the potential for escalation in a region that supplies a significant portion of global crude.