SINGAPORE, Oct 10 Reuters Oil prices eased on Tuesday after rallying more than 4 in the previous session, with traders cautious as they watched for potential supply disruptions amid military clashes between Israel and the Palestinian Islamist group Hamas.

Brent crude fell 56 cents, or 0.6, to 87.59 a barrel by 0630 GMT, while U.S. West Texas Intermediate crude eased 56 cents, or 0.6, to 85.82 a barrel.

Both benchmarks surged more than 3.50 on Monday as the clashes raised fears that the conflict could spread beyond Gaza into the oilrich region. Hamas launched the largest military assault on Israel in decades on Saturday, while fighting continued into the night on Monday as Israel retaliated with a wave of air strikes on Gaza.

There is still plenty of uncertainty across markets following the attacks in Israel over the weekend, said ING analysts on Tuesday, adding that oil markets are now pricing in a risk premium.

If reports of Iran39;s involvement turn out to be true, this would provide another boost to prices, as we would expect to see the U.S. enforcing oil sanctions against Iran more strictly. That would further tighten an already tight market, the ING analysts added.

While Israel produces very little crude oil, markets worried that if the conflict escalates it could hurt Middle East supply and worsen an expected deficit for the rest of the year.

Israel39;s port of Ashkelon and its oil terminal have been shut in the wake of the conflict, sources said on Monday….