Oil prices were falling on Wednesday even as hostilities in the Middle East between Israel and Hamas in Gaza continued.
While Hamas said it had accepted a cease-fire on Monday, Israel didn’t agree to it and, on Tuesday, Israel seized the Gaza side of a crossing to Egypt. Negotiations in Qatar are continuing, brokered by CIA Director William Burns. At the same time, President Joe Biden delayed the sale of weapons to Israel.
Such…
Oil prices were falling on Wednesday even as hostilities in the Middle East between Israel and Hamas in Gaza continued.
While Hamas said it had accepted a cease-fire on Monday, Israel didn’t agree to it and, on Tuesday, Israel seized the Gaza side of a crossing to Egypt. Negotiations in Qatar are continuing, brokered by CIA Director William Burns. At the same time, President Joe Biden delayed the sale of weapons to Israel.
Such geopolitical uncertainty would normally send oil prices higher. The concern is that the conflict could draw in other countries in the region such as Iran or Saudi Arabia, threatening areas that produce significant amounts of the world’s oil supply.
Yet crude prices are still about 9% lower than they were a month ago. That may reflect optimism that a cease-fire agreement will be reached, or that the conflict is unlikely to escalate further. Other factors were a report showing U.S. fuel inventories increased, and a strengthening dollar that makes oil more expensive for foreign buyers.
West Texas Intermediate, the U.S. benchmark, slipped 0.8% to $77.75 a barrel.
the international standard, also retreated 0.8%, to $82.60.
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Traders may be relieved that the tension in the Middle East isn’t as bad as it could have been since Hamas attacked Israel in October. But if the situation changes, geopolitical problems could send oil prices higher again.
Write to Brian Swint at brian.swint@barrons.com
Read More: The Oil Market Doesn’t Seem Worried About Middle East Tensions. Here’s Why.