Oil Prices Slide as Middle East Ceasefire Hangs in the Balance
Uncertainty Grips Global Markets as Ceasefire Deal Remains Elusive
Oil prices took a hit on Wednesday amid lingering uncertainty over global production levels, with a potential Middle East ceasefire hanging precariously in the balance. At 08:40 ET (12:40 GMT), crude oil prices fell 0.5% to $82.91 a barrel, while Brent dropped 0.6% to $78.04 a barrel.
Israel and Hamas at Odds over Ceasefire Terms
The elusive Israel-Hamas ceasefire deal continued to evade negotiators as Palestinian militant group Hamas accepted a Gaza ceasefire proposal, which Israel deemed inadequate. This led to retaliatory strikes on the city of Rafah in southern Gaza, indicating a lack of progress towards a resolution.
Despite preparations for ceasefire talks, the prolonged conflict’s regional escalation has raised concerns among investors, fearing disruptions in Middle Eastern crude supplies.
Russia’s Potential Role in Production Decisions
Russian Deputy Prime Minister Alexander Novak hinted at a possible increase in crude production, leading to a slight market downturn. OPEC+ could pivot towards raising output, given Russia’s strengthened financial position despite sanctions.
The OPEC+ alliance, which has been adhering to voluntary output cuts, will convene on June 1 in Vienna to decide on future production policies.
US Inventories Report and Market Impact
In addition to geopolitical tensions, the upcoming U.S. inventory reports will impact market sentiment. Forecasts suggest a decline in crude oil and product stockpiles, aiming to counteract a surprise increase reported by the API in the previous week.
The Energy Information Administration’s upcoming report will offer insights into the global oil market and U.S. oil and gas production forecasts for the rest of the year and beyond.
(Ambar Warrick contributed to this article.)
