Investing.com — Oil prices plunged in early Asian trade on Monday after Israel withdrew its soldiers from parts of the Gaza Strip and promised new talks over a possible ceasefire with Hamas.
The move signaled that long-running fears of war, which had driven oil prices higher in recent weeks, may be subsiding.
Oil prices rose to a five-month high last week after Iran threatened military action against Israel over the alleged attack on its embassy in Syria, and there was also some profit-taking.
Prices expiring in June fell 1.8% to $89.56 per barrel and fell 1.7% to $84.63 per barrel by 20:35 ET. Ta.
Israel and Hamas begin ceasefire talks in Egypt
Israeli and Hamas teams met in Egypt for renewed ceasefire talks, with the talks taking place just days before the Eid holiday this week.
Israel also withdrew its troops from southern Gaza, including Khan Yunis. However, the country continued to maintain military forces in other parts of the disputed region.
The developments, particularly the ceasefire talks, showed some potential for further escalation of the conflict, especially as the United States urged Israel to ease its offensive against Gaza, citing human rights violations.
However, due to the escalation of the Israel-Hamas war, important points supporting the oil market, particularly crude oil supplies from the Middle East, may be disrupted by the conflict.
This idea has been a key point in favor of oil in recent weeks and is expected to remain in place until a formal ceasefire is signed.
Expectations of tight oil supply remain influential
Expectations of tighter oil supplies have also pushed oil prices higher in recent weeks, and the impact continues.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) recently reiterated that they would continue production cuts until the end of June, and Russia, the world’s largest producer, also warned against further cuts.
Russia’s fuel production was also disrupted by attacks on Ukraine’s oil infrastructure, causing several major refineries to shut down.
On the demand side, positive economic data from China, the world’s largest oil importer, also adds to optimism, while declining gasoline inventories in the United States point to strong demand in the world’s largest fuel consumer.
