Oil prices fall as risk premium fades after Gaza deal

Brent and US crude futures fell more than $2 a barrel, or over 3%, on Friday as confidence grew the Gaza peace agreement between Israel and Hamas was taking hold.

Brent crude futures were down $2.16, or 3.31%, at $63.06 a barrel at 10:37 am. CDT (1537 GMT), the lowest since early June.

“President Trump’s ceasefire announcement immediately took the premium out of the price of oil, not only because of Israel and Hamas but also the reduction of a risk that Iranian proxies would continue to attack oil vessels in the Red Sea and other places,” said Phil Flynn, senior analyst with the Price Futures Group.

Ceasefire agreement

Israel and Hamas signed a ceasefire agreement on Thursday in the first phase of US President Donald Trump’s to end Israeli aggression in Gaza.

Under the deal, which Israel’s government ratified on Friday, fighting will cease, Israel will partially withdraw from Gaza, and Hamas will free all remaining hostages it captured in the attack that precipitated the war, in exchange for hundreds of prisoners held by Israel.

Numerous vessels have been attacked Houthis in Yemen since 2023, targeting ships they deem linked to Israel in what they described as solidarity with Palestinians.

The Gaza ceasefire deal means the focus can move back to the impending oil surplus, as OPEC proceeds with the unwinding of production cuts, said Daniel Hynes, an analyst at ANZ.

A smaller-than-expected November hike in output agreed by the Organization of the Petroleum Exporting Countries and allies (OPEC+) on Sunday eased some of those oversupply concerns.

“Markets’ expectations for a sharp ramp-up in crude supply have not manifested themselves in substantially lower prices,” BMI analysts said in a note on Friday. Investors are also worried that a prolonged U.S. government shutdown could dampen the American economy and hurt oil demand in the world’s largest crude consumer.