Oil Prices Fall as Gaza Ceasefire Hopes and Stronger Dollar Impact Market
Oil prices took a hit on Friday, ending the week with a significant drop due to growing optimism about an extended ceasefire in the Israel-Hamas war, which has cooled the supply risks premium embedded into prices.
By 14:30 ET (19.30 GMT), the futures settled 2.1% lower at $72.28 a barrel and the contract dropped 1.9% to $77.19 a barrel. The crude benchmarks fell more than 7% this week.
Talk of Israel/Hamas Ceasefire Deflates Supply Risk Premium
Reports suggest Israeli and Hamas leaders are considering a ceasefire that many expect to mark a severe de-escalation in military tensions in the Middle East, which have been a key point of support for oil prices in recent months.
Attacks by the Iran-aligned, Yemeni Houthi group on vessels in the Red Sea had disrupted shipping activity in the region. After U.S.-led forces recently struck back against the Houthis, the conflict saw several shipping operators steer clear of the Suez Canal, which in turn pointed to potential oil delivery delays in Europe and Asia.
But given that the Houthis’ main point of contention was the Israel-Hamas war, any de-escalation in the conflict is expected to wind down tensions in the Red Sea, lifting any disruptions to oil supplies.
Strong Jobs Data Boosts Dollar to Pile on Crude Price Woes
The dollar jumped Friday following the release of data showing the economy created 353,000 jobs last month, significantly above the expected 187,000. A stronger dollar makes oil, priced in U.S. dollars, more expensive and less attractive to foreign buyers.
These strong numbers followed the Federal Reserve downplaying expectations for early interest rate cuts in 2024 during a meeting earlier this week. Keeping interest rates at elevated levels could further cool economic activity, hitting crude demand in the world’s largest consumer.
(Peter Nurse, Ambar Warrick contributed to this article.)
