SINGAPORE – Oil prices slipped slightly on Friday as traders reacted to easing geopolitical risks following a landmark ceasefire agreement between Israel and Hamas, marking the first phase of US President Donald Trump’s plan to end the Gaza war.
Brent crude futures were down 7 cents at $65.15 per barrel by 03:38 GMT, while US West Texas Intermediate (WTI) fell 2 cents to $61.49. The decline followed a 1.6% drop in the previous session.
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Under the newly ratified deal, Israel will partially withdraw from Gaza, and Hamas will release all remaining hostages in exchange for hundreds of prisoners held in Israel. The truce has significantly reduced the war-related risk premium that has buoyed oil prices in recent months.
Despite the pullback, both crude benchmarks remain up around 1% for the week, recovering from steep losses last week. Earlier gains were driven by stalled progress on a Ukraine peace deal, which raised concerns about continued sanctions on Russia, the world’s second-largest oil exporter.
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Analyst Daniel Hynes of ANZ said the Gaza truce “shifted market focus back to the impending oil surplus, as OPEC proceeds with the unwinding of production cuts.”
The OPEC+ alliance’s smaller-than-expected production increase for November has also helped contain oversupply fears. “Markets’ expectations for a sharp ramp-up in crude supply have not materialized,” analysts at BMI noted, “contributing to a slight rise in prices for the week.”
However, investor sentiment remains cautious amid concerns that a prolonged US government shutdown could weigh on economic activity and hurt demand in the world’s largest oil consumer.