Oil & Gas

Oil prices edged lower on Thursday following news of a potential ceasefire agreement between Israel and Hamas, which helped ease geopolitical tensions in the Middle East. The development reduced the risk premium previously built into the oil market due to fears of a broader regional conflict. According to Reuters, Brent crude futures dropped 34 cents, or 0.5%, to $65.91 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 38 cents, or 0.6%, to $62.17.

A stronger U.S. dollar added further downward pressure on oil prices, making commodities priced in the dollar more expensive for holders of other currencies. Kelvin Wong, senior market analyst at OANDA, told Reuters that the WTI crude is trading "on the weaker side of the pendulum" because of the reduced geopolitical risk premium tied to the ceasefire deal. Markets are reacting to a shifting landscape where a significant threat to supply disruption appears to be diminishing.

U.S. President Donald Trump announced that Israel and Hamas had agreed to the first phase of a long-awaited ceasefire and hostage release plan, signaling a potential end to the two-year conflict in Gaza. Israeli Prime Minister Benjamin Netanyahu is expected to convene the government on Thursday to approve the agreement, as per Reuters reports. The development is seen as a diplomatic breakthrough, with global markets closely watching the implications for regional stability.

Despite the immediate market reaction, analysts cautioned that the ceasefire is unlikely to have a major impact on actual oil supply. The recent support for oil prices had been driven largely by concerns over the conflict escalating into a broader regional war, particularly involving key oil-producing nations. With those fears easing, attention is likely to return to fundamentals such as global demand, inventory levels, and broader economic indicators.