By Adedapo Adesanya
Oil prices fell on Monday after Israel reduced its troops in southern Gaza and began a fresh round of ceasefire talks with Hamas, bringing down Brent crude futures by 79 cents or 0.9 per cent to $90.38 a barrel as the US West Texas Intermediate (WTI) crude futures declined by 48 cents or 0.6 per cent to trade at $86.43 per barrel.
Israel said on Sunday it had withdrawn more soldiers from southern Gaza, leaving just one brigade, as it and Hamas sent teams to Egypt for fresh talks on a potential ceasefire in the six-month conflict.
However, a Hamas official said the talks remained deadlocked and the prices slumped with investors focusing on Israel’s decision to withdraw more soldiers from southern Gaza.
Market analysts noted that Israel’s decision has reduced the geopolitical risk premium, adding that weighing on oil prices were expectations that US crude oil stocks likely rose last week.
The decline in oil prices is also capped by uncertainty around how Iran will respond to the bombing of its consulate in Syria last week.
Israel has declined to comment on the attack, which killed several key figures from Iran’s Islamic Revolutionary Guard Corps (IGRC), including Brigadier General Mohammad Zahedi – a senior commander in the IRGC’s affiliated Quds Force – and his deputy, General Mohammad Hajriahimi, among others.
However, Iran’s Foreign Minister Hossein Amirabdollahian described the attack “as a violation of all international obligations and conventions” and directly blamed Israel.
Iran also said it would take revenge on Israel, feeding concern that the Middle East conflict could broaden and rude benchmarks jumped 4 per cent last week, with Brent futures rising for the fourth consecutive week – the longest rally since August 2023.
Among factors affecting oil’s demand outlook, a US employment report on Friday suggested the economy ended the first quarter on solid ground, which could prompt the Federal Reserve to delay interest rate cuts.
The market will also be looking at consumer price index data from the US and China this week for further clues on economic health of the world’s top two oil consumers.