Oil prices fell more than $1 on Monday due to concerns for a larger war in the oil-rich area and a strain on supply as diplomatic attempts to contain a crisis between Israel and the Palestinian Islamist organization Hamas escalated over the weekend.
As of 02:03 GMT, Brent oil futures were down 67 cents to $91.49 a barrel after losing $1.02 to $91.14 earlier in the session. After falling $1.72 to $87.03 a barrel earlier in the day, U.S. West Texas Intermediate oil futures dropped 72 cents to trade at $87.36 per barrel.
Concern over a potential supply interruption if the Israel-Hamas conflict escalates into a larger conflict in the Middle East, the world’s largest source of oil, caused the contracts to rise more than 1% last week for the second consecutive weekly increase.
Over the weekend, aid convoys from Egypt began to reach the Gaza Strip as Arab foreign ministers and presidents assembled in Cairo for a meeting that ended without a consensus declaration.
According to ANZ Research, the U.S. pressure led to Israel agreeing to delay its strike on Hamas. “This eased concerns that the Israel-Hamas war would spread across the Middle East and disrupt supplies.”
However, the most recent developments saw Israel pound Gaza with airstrikes and hit Lebanon. Monday saw a little decline in Asian stocks.
After a Venezuelan government agreement with the opposition, the United States lifted sanctions on the OPEC member to relieve pressure on the oil supply, which was already tight owing to output restrictions by OPEC and allies, notably Russia.
Following talks with Pope Francis and Israeli Prime Minister Benjamin Netanyahu on Sunday, U.S. President Joe Biden, who visited Israel last week, also spoke with the leaders of Canada, France, Britain, Germany, and Italy.
This week, the leaders of France and the Netherlands will go to Israel to find a resolution to the crisis that began on October 7 following a Hamas strike.
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