Oil prices exhibited minimal variation during early Asian trading on Friday, following a decline exceeding 1% in the prior session. This stability in prices can be attributed to the diminishing war risk premium in the market, subsequent to the agreement between Israel and Hamas on the initial phase of a plan aimed at concluding the conflict in Gaza. Brent crude futures experienced an increase of 9 cents, equivalent to 0.1%, reaching a price of $65.31 per barrel as of 0044. U.S. West Texas Intermediate crude experienced an increase of 12 cents, representing a 0.2% rise, reaching a price of $61.63.
On Thursday, Israel and the Palestinian militant organization Hamas reached a ceasefire agreement, marking the initial phase of U.S. President Donald Trump’s efforts to resolve the conflict in Gaza. Under the agreement ratified by Israel’s government on Friday, hostilities will come to an end, Israel will execute a partial withdrawal from Gaza, and Hamas will release all remaining hostages taken during the initial assault that triggered the conflict, in return for the release of hundreds of prisoners currently held by Israel. Prices attained a one-week peak after experiencing an approximate 1% increase on Wednesday, attributed to the stagnation in negotiations regarding a Ukraine peace agreement, indicating that sanctions on Russia, the world’s second-largest oil exporter, may persist.
On a weekly basis, both benchmarks experienced an increase of approximately 1.2% following a significant decline in the previous week. According to Daniel Hynes, the Gaza ceasefire deal represents a significant advancement in the effort to conclude the two-year conflict, which has heightened concerns regarding potential disruptions to oil supply. “This deal saw the focus move back to the impending oil surplus, as OPEC proceeds with the unwinding of production cuts,” Hynes stated.
The decision by the Organization of the Petroleum Exporting Countries and allies (OPEC+) to implement a smaller-than-anticipated increase in output for November on Sunday has alleviated some of the prevailing oversupply apprehensions. Concerns among investors are mounting regarding the potential impact of an extended U.S. government shutdown on the American economy, which could subsequently affect oil demand.