Oil prices retreated as Gaza ceasefire reshapes geopolitical risk premium

Oil prices fell on Thursday following news of a ceasefire agreement between Israel and the Palestinian resistance group Hamas, easing geopolitical tensions that had sustained a risk premium in crude markets in recent months.

Brent settled $1.03 lower, or 1.6%, at $65.22 a barrel, 

WTI declined $1.04, or 1.7%, to $61.51 a barrel.

The truce marks a significant breakthrough in Middle Eastern diplomacy, with potential ripple effects for regional security and energy flows. Market participants said the deal could reduce the frequency of Houthi attacks on shipping routes in the Red Sea and raise prospects for renewed nuclear negotiations with Iran—both of which could weigh on prices if supply risks ease.

Providing some support, the US Treasury Department imposed fresh sanctions on more than 50 individuals, entities and vessels accused of facilitating Iranian crude and liquefied petroleum gas exports. Traders are watching closely to see whether Washington will reassess its stance toward Tehran following the Gaza ceasefire, given Iran’s backing of Hamas.

Meanwhile, OPEC and its allies in OPEC+ agreed earlier this week to a smaller-than-expected production increase for November, easing oversupply concerns and partially cushioning the market from sharper losses.

Written: Farid Muzaffar