The oil market was down on Thursday after Israel and the Palestinian militant group, Hamas, signed an agreement for a ceasefire in Gaza.
The price of Brent crude stood at $65.22 per barrel after shedding $1.03 or 1.6 per cent, and the price of the US West Texas Intermediate (WTI) crude declined by $1.04 or 1.7 per cent to trade at $61.51 per barrel.
Israel and Hamas signed an agreement yesterday to cease fighting and free Israeli hostages in exchange for Palestinian prisoners, in the first phase of US President Donald Trump’s plan to end the war in Gaza.
Under the ceasefire deal, fighting will cease, Israel will partially withdraw from Gaza, and Hamas will free all remaining hostages it captured in the attack that precipitated the war, in exchange for hundreds of prisoners held by Israel.
Since conflict often buoys oil prices, ease in conflict weakened the price on Thursday.
Market analysts noted that this development has implications for oil markets which could be wide-ranging, from the possibility of a decrease in the Houthis’ attacks in the Red Sea to an increase in the likelihood of a nuclear deal with Iran.
Investors also viewed stalled progress on a Ukraine peace deal as a sign that sanctions against Russia, the world’s second-largest oil exporter, would continue for some time.
The Organisation of the Petroleum Exporting Countries and allies (OPEC+) agreed on Sunday to a November output hike that was smaller than market expectations at 137,000 barrels per day, easing oversupply concerns.
Meanwhile, lawmakers in the US government moves to end a shutdown of government has not secured the votes needed for passage in the Senate. A prolonged shutdown could dampen the economy and hurt oil demand.
Also, Indian Prime Minister Narendra Modi said he spoke to President Trump on Thursday, as the country seeks to negotiate with the US.
President Trump recently imposed a on most exports from India, among the highest for any US trading partner. The tariffs were on Indian goods from 25 per cent over the country’s continued imports of Russian oil.
The US also imposed sanctions on about 100 individuals, entities and vessels, including a Chinese independent refinery (known as teapots) and terminal, that helped Iran’s oil and petrochemicals trade.
Analysts said China’s teapots may shrug for now, but a growing list of blacklisted intermediaries could make insuring, financing, and disguising Iranian barrels far riskier than it was before.