Oil prices dropped over $2 per barrel on Monday following reports that Israel and Lebanon had agreed in principle to a ceasefire deal to end the Israel-Hezbollah conflict. Brent crude settled at $73.01, down $2.16 (2.87%), while U.S. West Texas Intermediate (WTI) closed at $68.94, a decrease of $2.30 (3.23%).
The news of potential de-escalation reduced geopolitical risk premiums, despite no disruptions to oil supply from the conflict. Analysts noted the market’s sensitivity to headlines about supply disruptions, with some cautioning that details of the ceasefire were still uncertain.
This decline follows last week’s strong gains, when both Brent and WTI reached their highest settlements since November 7 amid heightened tensions from Russia’s hypersonic missile launches and Ukraine’s retaliatory strikes with Western-supplied weapons.
Looking ahead, OPEC+ may maintain its current output cuts into January, as indicated by Azerbaijan’s Energy Minister, with the group set to meet online on December 1.