Oil prices fell more than 2% on Monday as diplomatic efforts in the Middle East intensified in a bid to contain the conflict between Israel and Hamas, easing concerns about potential supply disruptions.
Brent crude futures fell $2.33, or 2.53%, to $89.93 a barrel, while U.S. West Texas Intermediate (WTI) futures lost $2.59, or 2.94 %, at $85.49 a barrel.
The losses were the largest for the two benchmarks since the beginning of October.
European Union leaders will call for a “humanitarian pause” in the conflict this week so that aid can reach Palestinians in Gaza, and the leaders of France and the Netherlands will visit Israel in the coming days.
“The looming risk to supply appears to have eased,” said Phil Flynn, an analyst at Price Futures Group. “People are reducing positions until they see how this plays out,” he added.
The armed wing of the Palestinian militant group Hamas said on Monday it had freed two female civilian captives in response to Egyptian-Qatari mediation efforts, with a source telling Reuters they were elderly Israelis. Israel continued its bombardment of Gaza on Monday after launching airstrikes on southern Lebanon overnight.
Both crude benchmarks posted weekly gains over the past two weeks, due to the possibility of a supply disruption in the Middle East, the world’s largest oil-supplying region, if the conflict spread.
On the other hand, US President Joe Biden announced last week the suspension of sanctions against Venezuela, a member of OPEC, after an agreement between the Venezuelan government and the opposition.
That could return exports to the market, but it is unclear to what extent this could mitigate the impact of supply risks in the Middle East.
“The move is expected to add between 200,000 and 300,000 barrels per day of Venezuelan crude oil to the global export market, which is not necessarily a market-moving event on its own, nor are those barrels expected to be imminent,” the RBC analyst Michael Tran in a note.
By Stephanie Kelly of Reuters
Source: Ambito
