World Oil Prices Slip Due to Gaza Ceasefire Negotiations

Posted by – World oil prices fell in trading on Friday this week. Meanwhile, if you look at it on a weekly basis, world oil prices move flat or no more than 1 percent.

The decline in world oil prices is due to the possibility of a ceasefire in Gaza. Meanwhile, the war in Europe and shrinking crude oil stocks in the United States (US) were able to prevent a deeper decline.

Quoting CNBC, Saturday (23/3/2024), the price of Brent oil, which is the world oil price benchmark for delivery in May, fell 35 cents to USD 85.43 per barrel. Meanwhile, US crude oil prices fell 44 cents to USD 80.63 per barrel.

These two oil price benchmarks recorded changes of less than 1 percent in trading this week.

“Everyone is looking forward to what this weekend will bring to Gaza,” said Again Capital LLC partner John Kilduff.

He added that successful peace talks would encourage Houthi rebels in Yemen to allow oil tankers to pass through the Red Sea.

US Secretary of State Antony Blinken said on Thursday he was confident talks in Qatar could reach a Gaza ceasefire deal between Israel and Hamas.

Blinken met with Arab foreign ministers and Egyptian President Abdel Fattah El-Sisi in Cairo as negotiators in Qatar focused on a ceasefire lasting about six weeks.

US Dollar
Meanwhile, the US dollar is set to gain another high in the second week of March after the Swiss National Bank’s surprise rate cut on Thursday supported the global risk sentiment.

A stronger US dollar makes oil more expensive for investors holding other currencies, reducing demand.

Although a possible ceasefire means crude oil can move more freely globally, a lower number of US oil rigs and the potential for easing US interest rates are helping to support prices.

“We still hold new highs given the broad expansion in increased risk appetite following mid-week Fed comments that proved less hawkish than anticipated,” said Jim Ritterbusch, of Houston-based Ritterbusch and Associates.

US equities, which tend to move in correlation with oil prices, hit a record high after the Federal Reserve ended its regular meeting with no change to US interest rates on Wednesday.

The conflict in Eastern Europe also prevented oil prices from weakening. Russia launched the biggest missile and drone attack on Ukraine’s energy infrastructure in the war to date on Friday, hitting the country’s largest dam and causing power outages in several regions, Kyiv said.

However, chatter has emerged in the market that Russia will further discount its barrel prices in light of the escalation, said Bob Yawger, director of energy futures at Mizuho. Deeper discounts could make Russian crude more attractive to international buyers.

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