Oil prices fell more than $1 on Monday as concerns about supply disruptions eased as diplomatic efforts intensified to contain the conflict between Israel and the Palestinian Islamist group Hamas.
Brent crude futures were down 67 cents at $91.49 a barrel by 06:28 GMT, after falling between $1.08 and $91.08 a barrel early Monday. West Texas Intermediate (WTI) crude oil futures fell 82 cents to $87.26 per barrel, after falling $1.72 per barrel to $87.03 at the beginning of the session.
Brent and WTI rose more than 1 percent last week for the second consecutive weekly gain on fears of potential supply disruptions if the Israel-Hamas war escalates into a broader conflict in the Middle East, the world’s biggest oil supply region.
Although Arab leaders and foreign ministers could not make a joint statement for the summit held in Cairo, aid convoys started arriving from Egypt to the Gaza Strip over the weekend.
Israel’s postponement of a planned ground assault on northern Gaza to negotiate the release of hostages has brought some relief to the oil market and hope for diplomacy.
The land siege is seen as a potential trigger to expand the Israel-Hamas conflict into the Middle East region, directly impacting crude oil’s risk premium over the past two weeks.
While analysts add that this provides hope that the Israel-Hamas war will not spread to the Middle East and disrupt the supply, in recent developments Israel bombed Gaza and its planes hit Lebanon.
Asian stocks fell on Monday.
To relieve the pressure on oil supplies, which are already tight due to production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, the United States suspended sanctions against OPEC member Venezuela, following the Venezuelan government’s agreement with the opposition.
Biden, who visited Israel last week, had a telephone conversation with the leaders of Canada, France, England, Germany, and Italy after meeting with Israeli Prime Minister Netanyahu and Pope Francis on Sunday. The leaders of France and the Netherlands will visit Israel this week to find a solution to the conflict that started on October 7 after the Hamas attack.