Oil Prices Firm as Middle East Ceasefire Looms
Oil stabilizes following a decline amid discussions on a ceasefire in the Middle East.
The global oil benchmark Brent remained steady above $91 a barrel on Monday, mitigating initial declines triggered by Israel’s decision to withdraw additional troops from Gaza and engage in new discussions regarding a possible ceasefire in the Middle East conflict.
Last week saw oil prices rise by approximately 4% due to increasing geopolitical tensions.
On Sunday, Israel announced the withdrawal of additional soldiers from southern Gaza. Since the beginning of the year, the country has been gradually decreasing troop presence in Gaza to alleviate pressure on reservists. There’s mounting pressure from allies for Israel to address the humanitarian situation in Gaza.
As of my last update in January 2022, Hamas is designated as a terrorist organization by some countries and organizations, including the United States, Israel, and the European Union.
One of the factors influencing the demand outlook for oil is the U.S. employment report released on Friday. The report indicated that the economy finished the first quarter strongly, potentially leading the Federal Reserve to postpone interest rate cuts this year.
Meanwhile, investors are apprehensive about the Ukrainian drone assaults targeting refineries in Russia. Additionally, the OPEC+ initiative to enforce output cuts among certain nations, coupled with a promising demand forecast, serves as a boost for crude oil prices. Positive economic indicators from China, the world’s largest importer, are fostering optimism and bolstering the potential for a rebound in crude oil prices through dip-buying opportunities.
This week, investors will closely examine the consumer price index data from both the U.S. and China. They are seeking additional insights into the potential timing of Federal Reserve rate cuts and aiming to assess the economic well-being of the world’s leading two oil consumers.