Oil prices increased, even after Hamas declared Monday evening that it had accepted the ceasefire proposal presented by Qatar and Egypt.
West Texas Intermediate crude pared earlier gains to settle above $78 a barrel, after issuing a statement on the proposal on Hamas’ Telegram channel. While Israel’s Channel 12 said Israel was studying the proposal, the government did not immediately provide an official comment. Traders said accepting the proposal could reduce crude oil prices by $2 to $3 per barrel.
Rebecca Babin, senior energy trader at CIBC Private Wealth, noted that traders are “waiting for confirmation from Israel before making headlines,” adding: “The $7-plus geopolitical risk premium has been eliminated as of over the last two weeks. avoided any further escalation.”
Price Support Factors
Oil prices have risen about 10% this year as unrest over Israel’s war on Gaza has expanded, including maritime disruptions in the Red Sea. Earlier, the Israeli army began transporting civilians from Rafah, a possible prelude to a long-awaited attack on that city.
Hamas and Israel are conducting indirect negotiations through Qatar, Egypt and the United States towards a deal that would lead to the release of Israeli detainees in Gaza, in exchange for the release of Palestinians held in Israeli prisons. The agreement will also include a cessation of fighting.
Meanwhile, the plan by OPEC and its allies to cut supplies is widely expected to continue into the second half of this year, to try to avoid a surplus. The two countries lagging behind in the group, Iraq and Kazakhstan, have drawn up plans to limit flows, in order to compensate for production exceeding their quotas at the start of the year.
