Oil prices rose on Tuesday after hopes for a ceasefire in Gaza faded in negotiations between Israel and Hamas.
Brent crude futures were up 14 cents at $90.52 a barrel by 0610 GMT. West Texas Intermediate (WTI) crude oil rose 10 cents to $86.53 a barrel.
The new round of Israel-Hamas ceasefire talks in Cairo concluded on Monday, with Brent falling for the first time in five sessions and WTI for the first time in seven sessions, on expectations that geopolitical risks may ease.
However, Netanyahu said on Monday that an unspecified date had been set for Israel’s occupation of the Rafah region in Gaza. The hopes that briefly affected the market that geopolitical tensions in the region could ease ended yesterday.
Hamas said early Tuesday that the offer Israel received from Qatari and Egyptian mediators did not meet the demands of Palestinian groups. However, Hamas said it would study the proposal before responding to mediators.
If the conflict does not end, there is a high risk that other countries in the region will become involved, especially Iran, a major supporter of Hamas and OPEC’s third-largest producer.
Iran’s response to last week’s suspected attack on Israel’s consulate in Syria could drag the oil market, which has been largely unaffected since Hamas attacked Israel, into conflict.
The positive geopolitical risk premium is indeed supporting oil’s current medium-term uptrend.
Broader fundamentals also support prices, analysts said. Data released Monday showed India’s fuel demand reached a record high in fiscal 2024, driven by rising gasoline and jet fuel consumption. The improvement in Chinese manufacturing activity announced last week is also expected to increase fuel demand.
This week, the market will be watching inflation data from the US and China for more signals on the economic direction of the world’s two largest oil consumers.
In the Americas, Mexico’s state oil company Pemex said it would cut crude exports by 330,000 barrels a day, allowing more supply to local refineries and cutting supplies to the company’s U.S., European and Asian buyers by a third.
