Oil prices settled lower on Tuesday after Israel agreed to a ceasefire deal with Lebanon, reducing oil’s risk premium and easing some tensions in the Middle East.
Brent crude futures settled down 20 cents, or 0.27 percent to $72.81 a barrel while the US West Texas Intermediate(WTI) crude futures settled at $68.77 a barrel, down 17 cents, or 0.25 percent.
Israel’s security cabinet has agreed a ceasefire deal with Lebanon on Tuesday. The accord was expected to take effect on Wednesday.
The Prime Minister of Israel, Mr Benjamin Netanyahu said he was ready to implement a ceasefire deal with Lebanon and would “respond forcefully to any violation” by Hezbollah.
A ceasefire could pressure crude oil prices because the US administration would likely reduce sanctions on oil from Iran, a supporter of Hezbollah.
Meanwhile, the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ are discussing a further delay to a planned oil output hike that was due to start in January.
Saudi Arabia, Russia, and Iraq, the three biggest producers in the OPEC+ alliance, met on Tuesday to discuss the state of the global oil market.
This happened days before the wider group will meet on December 1 to decide how to proceed with the production cuts.
The group pumps about half the world’s oil and had planned to gradually roll back oil production cuts with small increases over many months in 2024 and 2025.
However, a slowdown in Chinese and global demand, and rising output outside the group, have put pressure on that plan.
US President-elect Donald Trump continues to create jitters for the market after he said he would impose a 25 per cent tariff on all products coming into the US from Mexico and Canada.
A considerable amount of Canada’s 4 million barrels per day of crude exports go to the US but analysts noted that Trump would likely not impose tariffs on Canadian oil, which cannot be easily replaced since it differs from grades that the US produces.
Crude oil inventories in the US fell by 5.935 million barrels for the week ending November 15, according to The American Petroleum Institute (API).
The official data from the US Energy Information Administration (EIA) will be released later on Wednesday.
