Crude prices rose Tuesday on signs of progress in US budget talks, easing fears of looming " fiscal cliff" in the world largest oil consuming country.

Investors were hoping for a budget deal soon between the White House and the Congress as both sides made major changes in positions.

In the latest talks, Republican House Speaker John Boehner

made a substantial shift by agreeing on raising tax for the American richest. Boehner offered a "Plan B", proposing to extend the Bush-era tax cut for people making less than $1 million a year.

Although President Barack Obama did not accept the "Plan B", he still made a change in position on tax increases for the rich by proposing to raise tax for people earning more than $400,000 instead of 250,000 a year.

Meanwhile, Enterprise Products Partners and partner Enbridge that would complete a 350,000 barrel per day (bpd) expansion to the 150,000 bpd Oklahoma to Texas Seaway pipeline in early January. With the expansion, the crude oil stocks pressure at the Cushing, Oklahoma, delivery point for the US oil futures contract, would be eased, which was supposed to be positive to the US oil prices.

In the Middle East, tension between Iran and the West and instabilities in other major oil producing countries also offered supports to oil prices.

Iran's President Mahmoud Ahmadinejad said on Tuesday Western sanctions will not slow down Tehran's nuclear program substantially, according to reports of Iran's state TV. Iraqi President Jalal Talabani suffered a stroke and was in a "critical but stable condition" in a Baghdad hospital, adding risks to the country's stability.

Light, sweet crude for January delivery added 73 cents, or 0.84 percent to settle at $87.93 a barrel on the New York Mercantile Exchange. Brent crude for February delivery gained $1.20, or 1.11 percent, to close at $108.84 a barrel.