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LONDON: Oil futures fell on Monday on reports that the U.S. had agreed a deal to ease sanctions on Venezuela, while investors continued to mull the potential impact of the escalating Israel-Hamas conflict on oil prices.

Brent futures were down $1.08, or 1.19%, at $89.81 a barrel at 1434 GMT. U.S. West Texas Intermediate (WTI) crude fell by $1.07, or 1.22%, to $86.62 a barrel.

The U.S. and Venezuelan governments reached a deal on Monday to ease U.S. sanctions on Venezuela’s oil industry in return for a competitive, monitored presidential election in Venezuela next year, the Washington Post reported.

Oil surges nearly 6 percent

Easing sanctions on Venezuela’s oil industry could result in increased oil supply.

But investors continue to weigh the significant geopolitical risks posed to oil markets by the Israel-Hamas war, and potentially higher oil prices as a result.

Both oil benchmarks had climbed nearly 6% on Friday, taking Brent 7.5% higher on the week and WTI up 5.9%.

Israeli air strikes on Gaza intensified on Monday, after diplomatic efforts to arrange a ceasefire in southern Gaza failed.

The White House said it hopes the Rafah crossing at the Gaza-Egypt border could open for a few hours on Monday to allow some people to leave ahead of Israel’s suspected ground offensive.

U.S. Secretary of State Antony Blinken returned to Israel on Monday, where he discussed humanitarian aid with Israeli Prime Minister Benjamin Netanyahu.

Russia has also entered the diplomatic fray, with President Vladimir Putin set to hold talks with Iran, Israel, Palestinians, Syria and Egypt.

Heightened tensions in the Middle East may have compounded other risk factors to push prices higher last week.

The United States last week imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7’s price cap of $60 a barrel, an effort to close loopholes in the mechanism designed to deprive Moscow of revenue for its energy sales.

“The sudden decision on tightening up of sanctions on ship owners carrying Russian crude over the $60/barrel limit by the US started to niggle and so did the Russian/Saudi meeting concluded by President Putin stating that OPEC+ were achieving ‘stability’,” PVM analyst John Evans said on price rises at the end of last week.

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