Oil Slips as Risk Premium Fades After Gaza Ceasefire
Oil prices edged lower on Friday, extending losses from the previous session as market risk premiums eased following a ceasefire deal between Israel and Hamas.
Brent crude futures fell 7 cents to $65.15 a barrel by 03:38 GMT, while U.S. West Texas Intermediate (WTI) slipped 2 cents to $61.49 per barrel.
Both benchmarks had already declined 1.6% on Thursday, but were still up about 1% for the week after recovering from steep losses last week.
Gaza Ceasefire Shifts Focus Away From Supply Risks
The ceasefire agreement, signed on Thursday, marks the first phase of U.S. President Donald Trump’s peace initiative aimed at ending the war in Gaza.
Under the deal, Israel will pause fighting, partially withdraw from Gaza, and exchange prisoners with Hamas, which will release all remaining hostages captured earlier in the conflict.
Analysts said the peace deal has reduced geopolitical risk premiums that previously supported higher oil prices.
Daniel Hynes, senior analyst at ANZ, noted that the deal redirected attention back to the prospect of an oil surplus, especially as OPEC moves ahead with its plan to unwind production cuts.
Market Focus Turns to OPEC and Global Supply
A smaller-than-expected output increase announced by OPEC+ on Sunday helped calm fears of an oversupply glut.
BMI analysts said the limited rise in production contributed to a slight rebound in prices this week, as markets had expected a sharper supply ramp-up.
Earlier in the week, oil had climbed about 1% to a one-week high on concerns that Ukraine peace talks were stalling, suggesting that sanctions on Russia, the world’s second-largest oil exporter, could stay in place longer.
Broader Market Outlook
Despite the recent stabilization, investors remain cautious.
Analysts warned that a prolonged U.S. government shutdown could weaken the American economy and curb oil demand in the world’s largest crude consumer.
Overall, the Gaza ceasefire marks a key step toward regional stability, but traders are now refocusing on global supply levels, OPEC’s next moves, and U.S. economic data to gauge the future direction of oil prices.
