Around 2:40 PM Lisbon time, the price of West Texas Intermediate (WTI) crude for November delivery fell 2.15% to $60.19 per barrel, having previously dropped to $59.57, the lowest level since April.
The North Sea Brent barrel for December delivery dropped 1.96%, reaching $60.19.
Oil prices are declining because this agreement “reduces the geopolitical risk premium” and eases “concerns related to supply disruptions,” explained Lukman Otunuga, an analyst at FXTM.
The weakness in crude oil prices is also attributed to “clear signs of the long-awaited abundance of the oil market,” visible in the “strong increase of oil in transit at sea,” according to analysts at DNB Carnegie.
In recent months, eight members of the Organization of the Petroleum Exporting Countries and their allies (OPEC+) have increased their production quotas by more than 2.5 million barrels per day.
This situation contrasts sharply with an oil demand that remains “virtually unchanged,” according to the International Energy Agency.
Fears of a market imbalance overshadow the war in Ukraine or even a new round of sanctions announced by the American government on Thursday, targeting about fifty individuals, companies, and vessels, mainly based in Asia and accused of participating in the sale and transportation of Iranian oil and gas.
Israel and Hamas announced a ceasefire agreement in the Gaza Strip on Wednesday night, the first stage of a peace plan proposed by U.S. President Donald Trump, following indirect negotiations mediated by Egypt, Qatar, the United States, and Turkey.
This stage of the truce involves the partial withdrawal of the Israeli army to the so-called “yellow line” marked by the United States, the dividing line between Israel and Gaza, and the release of 20 hostages held by Hamas and 1,950 Palestinian prisoners.
