Energy
Monday, April 8th, 2024 6:05 pm EDT
Key Points
- Oil prices fall after Israel reduces troop presence in Gaza – This signals a potential de-escalation in the Israel-Hamas conflict, leading to a drop in oil prices.
- Oil prices rose last week due to heightened tensions in the Middle East – Concerns about a wider conflict between Israel and Iran, along with a missile strike on an Iranian consulate, pushed oil prices up.
- Global oil supplies remain tight – The Ukraine war and OPEC+ production cuts contribute to limited oil supply, impacting prices.
The price of oil futures in the United States dropped on Monday after Israel reduced its military presence in the Gaza Strip. This follows a week where oil prices had risen due to heightened tensions between Israel and Iran. The price of West Texas Intermediate crude oil for May delivery fell by 76 cents, or 0.87%, to $86.15 per barrel. Brent crude oil for June delivery also saw a price decrease, falling by $1, or 1.14%, to $90.13 per barrel.
The Israeli troop withdrawal from southern Gaza signifies a potential de-escalation of the conflict that began in October 2023. This comes alongside ongoing ceasefire negotiations between Israel and Hamas in Cairo, Egypt. The previous week had seen a surge in oil prices exceeding 4% due to rising tensions between Israel and Iran. Concerns mounted that a direct confrontation between these two nations could erupt into a wider regional conflict, potentially disrupting crucial crude oil supplies.
Adding to these tensions was a warning issued over the weekend by a top Iranian military advisor, who threatened potential attacks on Israeli embassies. Iran has accused Israel of carrying out a missile strike on its consulate in Damascus, Syria, which resulted in the death of a high-ranking Iranian commander. The advisor, General Rahim Safavi, stated that “None of the embassies of the (Israeli) regime are safe anymore.”
Another factor contributing to the previous week’s oil price increase was the ongoing conflict in Ukraine. Ukrainian drone strikes targeted Russian oil refineries, further tightening global oil supplies. This comes at a time when global demand for oil is already high due to robust economic growth, while production cuts implemented by the OPEC+ group of oil-exporting countries have also limited supply.
