Oil recovered after tumbling the most in more than two years on Monday, as the wipeout of a geopolitical premium in prices shifted traders' gaze back to supplies and key upcoming events including the US election. 

Brent rose above $72 a barrel after plummeting 6.1% in the previous session, while West Texas Intermediate traded around $68. Israel signaled it was open to a short truce in Gaza in exchange for the release of a small number of hostages, following a retaliatory strike on Iran over the weekend that spared the OPEC producer's oil infrastructure.

In a sign that war risk is fading, the premium of bullish oil call options over the opposite puts has narrowed sharply. A gauge of implied volatility for Brent also fell to the lowest in almost a month on Monday, and a swath of contracts expired worthless as prices cooled. 

Brent for December settlement gained 1% to $72.14 a barrel at 10:26 a.m. in London. WTI for December delivery rose 1% to $68.03 a barrel.

Source: Bloomberg