Oil prices dropped by more than $2 per barrel on Monday after reports surfaced that Israel and Lebanon had agreed to terms on a deal aimed at ending the ongoing Israel-Hezbollah conflict. Brent crude for January delivery fell by 2.75%, reaching $73.10 per barrel at 11:45 AM ET, while West Texas Intermediate (WTI) crude dropped 2.70%, trading at $69.36 per barrel.
Reuters reported that a senior Israeli official confirmed the country’s cabinet would meet on Tuesday to approve a ceasefire agreement with Hezbollah. A Lebanese official added that the U.S. had informed Beirut that the deal could be announced “within hours.”
UBS analyst Giovanni Staunovo suggested that news of the potential ceasefire was behind the price drop. He noted, however, that no oil supply disruptions had occurred due to the conflict, and the risk premium in oil prices had already been low before the recent decline.
Earlier in the year, Israeli officials had suggested that a deal to end the war was nearing, although some issues remained unresolved. Lebanese officials expressed cautious optimism but raised concerns, with some questioning the trustworthiness of Israeli Prime Minister Benjamin Netanyahu.
Meanwhile, last week, oil prices saw their largest weekly gains since late September, fueled by tensions following a Russian hypersonic missile strike on Ukraine. The missile attack appeared to be a warning after Kyiv used U.S. and British-made weapons to strike Russian targets. Russian President Vladimir Putin announced on Friday that Russia would continue testing the new hypersonic Oreshnik missile, with plans to produce it in large quantities.
Putin claimed the missile could not be intercepted by any existing air defense systems, describing it as a weapon of unmatched speed and maneuverability. The Oreshnik, an intermediate-range, nuclear-capable missile, travels at speeds of Mach 10, making it difficult to track and intercept mid-flight.
In summary, oil prices fell amid hopes for peace between Israel and Lebanon, while geopolitical tensions linked to Russia’s missile tests contributed to earlier price increases.
Related Topics:
- Nigeria’s Wealthiest Man Tackles ‘Oil Mafia’ With $20B Mega Refinery
- Oil Prices Rise 2% Due to Geopolitical Tensions
- Europe’s Biggest Oilfield Restarts Production After Power Outage