Crude oil prices rise on Tuesday after losing more than $2 the day before, as investors take into account the possible ceasefire between Israel and Hezbollah, which had pressured the oil risk premium.
At 1018 GMT, Brent futures were up US$0.73, or 1%, at US$73.74 a barrel. and West Texas Intermediate in the United States CLc1 advanced US$0.68 cents, or 1%, to US$69.62.
Prices fell strongly on Monday following multiple news that Israel and Lebanon had agreed to the terms of a pact to end the conflict with the Hezbollah group. A senior Israeli official said it appears a US ceasefire plan will be approved during the day.
The market reaction to the news of the ceasefire was “exaggerated”as the broader Middle East conflict “has never really disrupted supplies significantly enough to induce war premiums” this year, said Priyanka Sachdeva, market analyst at Phillip Nova.
A ceasefire in Lebanon would reduce the chances of the next US administration imposing more sanctions on Iranian crude, according to ANZ analysts. Iran supports Hezbollah and is a member of OPEC, with production of about 3.2 million barrels per day.
On the other hand, at its next meeting on Sunday, Opec+ could consider maintaining its current pumping cuts starting January 1. The producer group is already postponing increases amid concerns about global demand.
The president-elect of the United States, Donald Trump, said the day before that he will impose a 25% tariff on all products arriving from Mexico and Canada. It is not clear whether this will also include crude oil.
Analysts have said Trump is unlikely to impose tariffs on Canadian oilwhich cannot be easily replaced, as it differs from the grades produced by the United States.
