Calm Prevails in Oil Markets as Geopolitical Fears Ease After Gaza Agreement

Oil prices stabilized in early Asian trading on Friday, reflecting a decrease in the risk premium associated with the war in Gaza, after Israel and Hamas announced their agreement on the first phase of a plan to halt fighting. This stability partially offsets the losses that exceeded 1% in the previous session.

Brent crude futures rose slightly to $65.31 per barrel, while West Texas Intermediate crude climbed to $61.63 per barrel. Despite this recent volatile performance, both crude types maintained weekly gains of about 1.2%, marking a partial recovery from the sharp decline seen in the markets last week.

In a related development, the Israeli government approved an agreement centered around a permanent ceasefire, along with a partial withdrawal of forces from the Gaza Strip, and a swap that includes the release of all remaining hostages in exchange for hundreds of Palestinian detainees.

Analyst Daniel Hynes from ANZ Bank commented on the developments, stating that the ceasefire agreement represents "a significant step towards ending the two-year-long war, which has increased the likelihood of disruptions to oil supplies." He also noted that "the agreement has refocused attention on the impending oil surplus, as OPEC moves forward with plans to lift production cuts."

It is worth mentioning that the markets experienced multiple fluctuations throughout the week, with prices peaking mid-week supported by stalled peace talks in Ukraine, keeping sanctions on Russian oil exports in effect. Traders are also eyeing the situation in Washington, where concerns are rising that any prolonged government shutdown could weaken the U.S. economy and energy demand.