Israel ceasefire prospects push oil prices to two‑week low
Oil prices on the New York fuel exchange are falling. This extends the largest decline in two weeks. It is most likely a reaction to information that Israel has accepted a proposal for a ceasefire in the Gaza Strip, brokers report.
A barrel of West Texas Intermediate crude for September delivery costs £60.95 on NYMEX in New York, down by 0.83%. Brent on ICE for October is priced at £63.75 per barrel, down by 0.77%.
Oil prices fall. The spectre of conflict escalation retreats
Israel has supported the American proposal for a ceasefire in the Gaza Strip; now Hamas must do the same, said US Secretary of State Antony Blinken, who met with Prime Minister Benjamin Netanyahu in Jerusalem on Monday at 1:00 PM GMT.
The head of American diplomacy also met with President Isaac Herzog and Defence Minister Yoav Gallant. From Israel, Blinken will travel to the capital of Egypt, Cairo, to negotiate further.
The US pressures Israel
Another round of high-level talks concerning the truce is set to take place this week. The US, pressuring both sides of the conflict to accept the agreement, had earlier announced that the deal could be finally accepted by the end of the current week.
Despite the optimism shown by the US, the stance of both Israel and Hamas indicates that reaching an agreement will be difficult, analysts comment.
The war in the Gaza Strip has been ongoing for 10 months continuously, with over 40,000 Palestinians killed. The war broke out after a Hamas attack on southern Israel on 7 October 2023, which resulted in the killing of nearly 1,200 people and the kidnapping of 251.
As analysts point out, alleviating the tense political situation in the Gaza Strip will weaken the risks associated with oil supplies from that region and contribute to the decline in crude prices.
China also affects oil prices
The declines in oil prices are also due to concerns about weak fuel demand prospects in China.
The deteriorating state of the country's economy keeps the fuel market in a "depressed" state, and recent data from China indicated a slowdown in factory activity and a decline in demand for crude oil.
Warren Patterson, Head of Commodities Strategy at ING Groep NV, said the key factor influencing sentiment on oil exchanges is the persistent concerns regarding Chinese demand for this raw material.
According to his predictions, the prospect of a ceasefire between Israel and Hamas would provide even stronger downward pressure on oil prices.
