Oil falls as geopolitical tensions ease
Oil prices are finishing the week with losses due to the flow of news about the ceasefire talks between Israel and Hamas. The decrease in geopolitical tensions in oil prices is causing downward price movements. Brent crude oil fell by more than 6 percent this week. Brent crude oil prices tested below $84 on the last trading day of the week. US crude oil is trading around $79. The impact of developments in the Middle East is particularly felt in this movement in oil. According to the latest news from the region, Hamas is working on a temporary ceasefire proposal with Israel and plans to send a delegation to Egypt to continue negotiations. In addition, data from the US this week showed another decline in fuel demand ahead of the summer season. Oil fell by about 10 percent from its highest level in five months in mid-April as the effects of Iran’s attack on Israel remained limited and Washington pressed for an end to the conflict in Gaza. A surprise surge in U.S. crude inventories led futures lower on Wednesday, adding to concerns about demand from top importer China and weakness in markets for products such as diesel and gasoline. “The geopolitical premium is rapidly being priced in as Israel appears more willing to accept the hostage deal,” said Robert Rennie, head of commodities and carbon strategy at Westpac Banking Corp. “It’s hard to see a big rally above the $90-$95 area for Brent and a drop below $85 would suggest a major top is forming.” OPEC+ decision also closely watchedThe decision by OPEC+ on output cuts is also high on the agenda in the oil market. Almost 90% of traders and analysts in a Bloomberg survey expected the coalition to extend production cuts when it meets on June 1, while the downside has stoked expectations that OPEC+ will extend them. The meeting is expected to be divided after the United Arab Emirates’ major oil company said it was increasing production capacity. Shell Plc Chief Financial Officer Sinead Gorman told a balance sheet teleconference on Thursday that OPEC “will make a difference in terms of supply and demand.” The International Energy Agency warned last month that global oil markets could return to oversupply if the group and its allies ease supply restrictions as demand slows.