Oil Prices Decline over Middle East Peace Talks
The crude oil prices dipped amidst ceasefire talks in the Middle East. There are reports of significant progress towards an Israel-Hezbollah deal. Brent dipped to $72.58 per barrel while the US benchmark West Texas Intermediate also declined by 0.05% to $68.93 per barrel.
The Israeli ambassador to the US is reported as saying “we are close to a deal” and that “it could happen within days” after addressing some final points.
A deal in the Middle East could also help reduce the tensions between Israel and Iran and lower the regional supply risks significantly for the oil market in immediate terms, ING commodities strategists say in a note on Tuesday..
US President Joe Biden’s senior envoy for the Middle East Brett McGurk will visit Saudi Arabia, ‘where he will discuss using the potential of a cease-fire deal in Lebanon as a catalyst for a potential Gaza cease-fire and for the return of hostages and for increased stability in the region, ‘White House spokesperson Andy Bates told reporters.
The White House earlier acknowledged ‘significant progress’ in efforts to broker a cease-fire between Israel and the Lebanese Hezbollah group but said more work remains before a pact can be completed.
Israel has escalated its airstrikes in Lebanon against what it claims are Hezbollah targets as part of year-long warfare against the Lebanese group since the start of the Gaza war last year.
More than 3,600 people have been killed in Israeli attacks in Lebanon, with more than 15,300 injured and over a million displaced since October 2023, according to Lebanese health authorities. On Oct. 1, 2024, Israel expanded the conflict by launching a ground invasion of southern Lebanon.
Meanwhile, expectations of US policy impact on the global economy and credit outlook continue to influence oil prices.
Trump has vowed to impose additional tariffs on imported goods from China, Canada and Mexico once he assumes office. New tariffs from the US could intensify the global trade frictions and may impact the economic growth prospects in the longer term, ING says in a note.
For energy markets, new tariffs could make crude oil and natural gas expensive in the US as Canada is one of the major suppliers of energy products. On the other hand, tight supplies from external markets could lead to bigger investments into shale drilling that may help push domestic production higher.
However, experts warn that fiscal expansion in the US, the world’s largest oil consumer, coupled with labor market tightness, low immigration, and rising tariffs, could reignite inflationary pressures and push bond yields higher.
Rising US bond yields, a strengthening dollar, and heightened market volatility are amplifying concerns about potential risks to emerging markets. #Oil Prices Decline over Middle East Peace Talks
