Oil retreated from a nearly two-month high as traders weighed a weakening physical market against escalating Mideast tensions.

When oil jumped above $90 a barrel just days ago, military tensions between Israel and Iran were the immediate trigger. But the rally’s foundations went deeper — to global supply shocks that are intensifying fears of a commodity-driven inflation resurgence.

Hedge funds and proprietary trading firms are beefing up agricultural markets expertise by hiring traders as big swings in prices have made even relatively niche corners of commodities trading lucrative during the past year.

After making more money than ever in the last few years, some of the world’s top energy traders are using the cash to expand in metals and agriculture.

Hedge funds and energy trading shops are scooping up index traders from banks, looking to capitalize on investors’ increasing interest in materials and the sector’s rising potential for outsized returns.

The US crude market’s structure is signaling oversupply for the first time in almost a year, the latest indicator of the scale of the dramatic slump in the nearest section of the oil futures market.

Oil had its biggest daily swing ever, surging to near $140 before pulling back sharply, on the prospect of even tighter supplies after the U.S. said it was considering a ban on Russian crude imports.

Oil prices rose on Tuesday following the biggest one-day tumble this year, with traders refocusing on the outlook for energy demand and shaking off broader weakness in financial markets.

Oil fell as the International Energy Agency said the global oil market has returned to surplus, while some countries tightened restrictions in an effort to tame the omicron variant’s spread.

Oil slipped in New York as traders weighed the risks from the omicron variant and OPEC boosted its forecast for global crude demand.