Oil Prices Drop as Israel and Hamas Reach First Phase Agreement on Gaza Peace Plan

Oil prices declined in early trading on Thursday following the announcement that Israel and Hamas had reached an agreement on the initial phase of a Gaza peace plan.

The early Thursday trading saw oil prices drop as Israel and Hamas agreed to the first phase of a plan to end the Gaza conflict, which reduced oil's war risk premium and prompted investors to sell their positions.

By 0002 GMT, Brent crude futures had decreased by 51 cents, or 0.77%, reaching $65.74 per barrel. Similarly, U.S. West Texas Intermediate crude experienced a decline of 55 cents, or 0.88%, settling at $62.

U.S. President Donald Trump announced that Israel and Hamas had successfully negotiated a long-sought agreement for a Gaza ceasefire and hostage release as part of a comprehensive plan to end the two-year conflict in the Palestinian territory.

Israeli Prime Minister Benjamin Netanyahu stated that he would convene a government meeting on Thursday to officially approve the ceasefire agreement.

The ongoing Gaza conflict has been a supportive factor for oil prices, as investors have been assessing the potential risks to global oil supply should the war escalate into a broader regional conflict.

On Wednesday, prices had increased by approximately 1%, reaching a one-week high as investors interpreted the lack of progress on a Ukraine peace deal as an indication that sanctions against Russia would continue.

Meanwhile, according to a report released Wednesday by the Energy Information Administration, the total weekly U.S. petroleum products supplied, which serves as an indicator for U.S. oil consumption, rose to 21.990 million barrels per day last week, marking the highest level since December 2022.