Oil prices declined on Friday, following a 1.6 per cent drop in the previous session, as the market’s risk premium eased after Israel and Hamas agreed to the first phase of a plan to end the war in Gaza.
Brent crude futures were down 33 cents, or 0.5 per cent, at $64.89 a barrel at 08:35 GMT. US West Texas Intermediate (WTI) crude slipped 24 cents, or 0.4 per cent, to $61.27.
“Finally having some kind of peace process in the Middle East is lowering the shoulders a little bit,” said Bjarne Schieldrop, chief commodities analyst at SEB. He added that this could ease fears about crude carriers passing through the Suez Canal and the Red Sea.
Israel and the Palestinian terrorist group Hamas signed a ceasefire agreement on Thursday in the first phase of US President Donald Trump’s initiative to end the war in Gaza.
Under the deal, which Israel’s government ratified on Friday, fighting will cease, Israel will partially withdraw from Gaza, and Hamas will release all remaining hostages captured in the attack that precipitated the war, in exchange for hundreds of prisoners held by Israel.
Numerous vessels have been attacked by the Iran-aligned Houthis in Yemen since 2023, targeting ships they deem linked to Israel in what they describe as solidarity with Palestinians over the conflict.
On a weekly basis, both crude benchmarks were poised to close in positive territory — Brent up around one per cent and WTI about 0.6 per cent — after steep declines last week.
Prices climbed roughly one per cent on Wednesday to a one-week high amid stalled progress on a Ukraine peace deal, suggesting sanctions against Russia, the world’s second-largest oil exporter, could continue.
The Gaza ceasefire allows the market to refocus on the looming oil surplus, as OPEC proceeds with unwinding production cuts, said Daniel Hynes, an analyst at ANZ.
A smaller-than-expected November output hike agreed by the Organization of the Petroleum Exporting Countries and allies (OPEC+) on Sunday helped ease some oversupply concerns.
“Markets’ expectations for a sharp ramp-up in crude supply have not manifested themselves in substantially lower prices,” BMI analysts said in a note on Friday.
“The most recent rise in production is lower than previously feared, contributing to a slight rise in prices for the week,” they added.
Investors are also worried that a prolonged US Government shutdown could dampen the American economy and hurt oil demand in the world’s largest crude consumer.
(Reporting by Anna Hirtenstein; Additional reporting by Sudarshan Varadhan; Editing by Christian Schmollinger and Mark Potter)
