Oil prices experienced on Monday a decline of over $1 following intensified diplomatic efforts over the weekend to de-escalate the conflict between Hamas and Israel.
During the weekend, Arab leaders and foreign ministers convened for a summit in Cairo, but unfortunately, they were unable to reach a consensus and issue a joint statement.
Read more: Increased oil prices prompts U.S. to ease sanctions on Venezuela
Brent crude futures experienced a decline of 79 cents, settling at $91.37 per barrel. Earlier in the session, they had dropped by $1.02 to $91.14 per barrel. Similarly, U.S. West Texas Intermediate crude futures saw a decrease of 91 cents, reaching $87.17 per barrel, following a previous slide of $1.72 to $87.03 per barrel earlier in the day.
Last week, the contracts experienced a consecutive weekly increase of over 1 percent due to concerns of possible supply disruptions if the conflict between Israel and Hamas escalates into a larger confrontation in the Middle East, which is the largest oil-supplying region in the world.
Vandana Hari, the founder of oil market analysis provider Vanda Insights, expressed that there is a sense of relief in the oil market. According to Hari, the possibility of a ground siege is perceived as a potential catalyst for an escalation of the Israel-Hamas conflict into the Middle East region. This factor has contributed to the presence of a risk premium in the crude oil market over the past two weeks.
Meanwhile, analysts at ANZ Research expressed a similar viewpoint, emphasizing that this development provided optimism that the conflict between Israel and Hamas would not extend throughout the Middle East and cause disruptions in the oil supplies.
In order to alleviate the strain on oil supply, which was already under pressure due to production reductions by the Organization of the Petroleum Exporting Countries (OPEC) and its affiliates, including Russia, the United States decided to temporarily suspend sanctions on Venezuela, an OPEC member. This decision came after the Venezuelan government reached a deal with the opposition.
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