Oil Prices Decline as Middle East Ceasefire Boosts Peace Hopes
Oil prices moved lower in early Asian trading on Friday after the United States announced a ceasefire agreement between Israel and Lebanon. The development raised expectations of broader de-escalation across the Middle East.
Crude Heads for Second Weekly Loss
Oil markets were also on track for a second consecutive week of notable losses, driven by growing optimism over potential U.S.-Iran peace talks. Sentiment improved further after U.S. President Donald Trump suggested that a more lasting ceasefire agreement could be within reach.
Brent crude futures declined 1.1% to $98.32 per barrel, while West Texas Intermediate (WTI) crude dropped 1.3% to $89.95 per barrel in early trading. Both benchmarks were down more than 3% for the week.
Trump Announces Israel-Lebanon Ceasefire Deal
President Trump confirmed a 10-day ceasefire between Israel and Lebanon following high-level discussions in Washington. He also indicated plans to host Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun at the White House for further negotiations.
The agreement appeared to be holding in the early hours of Friday, encouraging expectations of reduced geopolitical tensions. Lebanon’s inclusion in the ceasefire was a key demand from Iran, adding to optimism around broader regional diplomacy.
Trump also urged stability during the ceasefire period, referencing Hezbollah’s role in the ongoing conflict. At the same time, he expressed confidence regarding progress with Iran, including claims that Tehran had agreed to transfer its uranium stockpile.
However, tensions remain elevated, with a U.S. naval blockade still in place and warnings of potential further military action. The ceasefire is set to expire on April 21, although there are indications it could be extended.
Oil Pressured by Iran Talks and Demand Concerns
Oil prices were further weighed down by expectations that the United States and Iran will resume negotiations before the current ceasefire expires. Market participants are increasingly pricing in the possibility of reduced geopolitical risk.
In addition, concerns over weakening global oil demand have added downward pressure on prices.
Demand Outlook Weakens Amid Global Uncertainty
Both the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC) have signaled softer demand expectations in the coming months. At the same time, ongoing disruptions in the Strait of Hormuz continue to create supply uncertainty.
Analysts from OCBC highlighted that control of the Strait of Hormuz remains a major risk factor, noting that U.S.-Iran negotiations could take several months to fully materialize.
Recent data also indicates that oil flows through the Strait remain significantly below pre-conflict levels. The key shipping route accounts for roughly 20% of global oil consumption, making it a critical factor for energy markets.
