WTI retreats from daily highs, looks to settle above $56

• Heightened geopolitical tensions in Middle East drive oil prices higher.
• IEA says they stand ready to supply the market if needed. 

Crude oil's sharp fall came to an end on Friday after Iran's Revolutionary Guards announced that they have captured a British-flagged oil tanker in the Gulf to revive concerns over possible supply disruptions. The barrel of West Texas Intermediate extended its rebound on Monday and tested the $57 mark before losing its traction in the second half of the day. As of writing, the WTI is up 1.04% on a daily basis at $56.30.

Responding to the conflict in the Middle East, the International Energy Agency (IEA) said that they are closely monitoring the developments in the Strait of Hormuz and they are ready to act if needed. "Emergency stocks are large enough to cover any disruptions in oil supply from Strait of Hormuz for an extended period," the IEA said to force crude oil to reverse its direction.

Meanwhile, reports of the force majeure on Libya's Sharara oilfield ending today put additional pressure on the commodity.

Markets will be closely watching the developments in the Middle East. Additionally, weekly API and EIA stock reports from the U.S. will be looked upon for fresh catalysts as well.