Oil prices increased during early Asian trading as optimism faded regarding the potential for ceasefire negotiations between Israel and Hamas to alleviate tensions in the Middle East.
Brent crude futures climbed by 40 cents to reach $90.78 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by 35 cents to $86.78.
The conclusion of a recent series of ceasefire discussions between Israel and Hamas in Cairo halted a multi-session rally on Monday. This resulted in Brent experiencing its first decline in five sessions and WTI in its first in seven, as the possibility of geopolitical risks subsiding emerged.
Israeli Prime Minister Benjamin Netanyahu announced on Monday that an undisclosed date has been established for Israel’s incursion into the Rafah enclave in Gaza.
Additionally, a senior Hamas official stated on Monday that Hamas has rejected the latest ceasefire proposal put forward by Israel during the talks in Cairo.
Oil prices dropped a day earlier over hopes that the of a ceasefire deal between the two warring groups in the Middle East. The recent developments, particularly the ceasefire negotiations, offered some promise for a significant reduction in the conflict’s intensity.
This was especially notable as the U.S. called on Israel to scale back its offensive against Gaza due to concerns over human rights violations.
Recommended reading: Oil prices drop by 2% over rumours of Isreal-Hamas truce
OPEC+ maintaining production cuts
Meanwhile, projections of reduced oil supplies had additionally propelled crude prices in recent weeks, and this trend continued to exert influence.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) last week reaffirmed their commitment to maintaining production cuts until the end of June, with top producer Russia indicating potential for further cuts.
Moreover, Russian fuel production faced disruption due to Ukrainian strikes on the nation’s oil infrastructure, resulting in the closure of several significant refineries.
