BEIJING (Reuters) -Oil prices rose on Wednesday after Israel attacked Hamas leadership in Qatar and U.S. President Donald Trump asked Europe to impose tariffs on buyers of Russian oil, but a weak market outlook capped gains.

Brent crude futures rose 35 cents, or 0.53%, to $66.74 a barrel by 0033 GMT, while U.S. West Texas Intermediate crude futures gained 36 cents, or 0.57%, to $62.99 a barrel.

Prices had settled up 0.6% in the previous trading session after Israel said it had attacked Hamas leadership in Doha, which Qatar's prime minister said threatened to derail peace talks between Hamas and Israel.

The oil price response was seen as relatively limited because of overall market weakness. Both benchmarks rose almost 2% shortly after the attack, but then retreated after the U.S. told Doha such a thing would not happen again on its soil.

"The modest reaction in crude oil prices to this news, along with scepticism regarding U.S. President Trump's claims about potentially ramping up sanctions on Russian oil ... leaves crude oil vulnerable to lower prices," IG market analyst Tony Sycamore said in a note.

Trump has urged the European Union to impose 100% tariffs on China and India as a strategy to pressure Russian President Vladimir Putin, according to sources.

China and India are major buyers of Russian oil, which has helped to support Russia's coffers since it launched its invasion of Ukraine in 2022, despite heavy sanction pressure from the U.S.

"The expansion of secondary tariffs to other major buyers such as China could disrupt Russian crude exports and tighten global supply, a bullish signal for oil prices," LSEG analysts wrote.

"However, uncertainty remains over how far the administration will go, as aggressive action could conflict with efforts to manage inflation and influence the Federal Reserve to reduce interest rates."

Traders expect the Federal Reserve to cut interest rates in its meeting next week, which would boost economic activity and demand for oil.

But fundamentals remain weak. The U.S. Energy Information Administration cautioned global crude prices will be under significant pressure in the coming months because of rising inventories as OPEC+ increases output.