Israel ceasefire talks trigger dip in oil prices
10:18 AM EDT, August 20, 2024
Oil prices on the New York fuel exchange are falling, marking the largest decline in two weeks. This is likely a reaction to news that Israel has accepted a proposal for a ceasefire in the Gaza Strip, according to brokers.
A barrel of West Texas Intermediate crude for September delivery costs $73.75 on NYMEX in New York, down by 0.83%. Brent on ICE for October is priced at $77.06 per barrel, down by 0.77%.
Oil prices fall. The specter 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 8:00 AM ET.
The head of American diplomacy also met with President Isaac Herzog and Defense Minister Yoav Galant. From Israel, Blinken will travel to the capital of Egypt, Cairo, for further negotiations.
The US pressures Israel
Another round of high-level talks concerning the truce is set to take place this week. The US, which is pressuring both sides of the conflict to accept the agreement, had earlier announced that the deal could be finalized 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 continuous months, with over 40,000 Palestinians killed. The conflict began after a Hamas attack on southern Israel on October 7, 2023, which resulted in the killing of nearly 1,200 people and the kidnapping of 251.
Alleviating the tense political situation in the Gaza Strip, as analysts point out, 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 decline in oil prices is 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.
"A key factor influencing sentiment on oil exchanges is the persistent concerns regarding Chinese demand for this raw material," said Warren Patterson, Head of Commodities Strategy at ING Groep NV.
"Now, the prospect of a ceasefire between Israel and Hamas will provide even stronger downward pressure on oil prices," added Patterson.
