Oil prices fell amid the ceasefire between Lebanon and Israel — Reuters
On Thursday, June 4, global oil prices fell following reports of a ceasefire between Israel and Lebanon. Markets reacted to expectations of a possible expansion of de-escalation agreements in the region, which could affect the safety of shipping in the Strait of Hormuz.
Brent crude futures fell by 87 cents, or 0.89%, to $96.92 per barrel, while U.S. West Texas Intermediate crude fell by 78 cents, or 0.81%, to $95.24.
Both Brent and WTI rose by about 2% on Wednesday following the resumption of hostilities in the Middle East, including Iranian attacks on Kuwait and U.S. military strikes near the Strait of Hormuz.
Israel and Lebanon announced late Wednesday that they had agreed to a ceasefire, raising hopes for a deal between Washington and Tehran, which had partly linked the conclusion of any agreement to a cessation of hostilities between Israel and Lebanon.
U.S. President Donald Trump suggested on Wednesday that progress in negotiations with Iran could be made as early as this weekend.
Iranian Foreign Minister Abbas Arakchi said on Wednesday that Tehran’s contacts with Washington had not been interrupted, but no progress had been made in the negotiations. He added that both sides are reviewing the texts they exchanged.
In the U.S., the Republican-led House of Representatives on Wednesday passed a resolution prohibiting Trump from continuing the war against Iran. For the resolution to take effect, it will need Senate approval and a two-thirds majority in both chambers to override a potential Trump veto.
The International Energy Agency warned on Tuesday that global oil reserves could reach critical levels ahead of peak summer demand if the decline in reserves continues at the current pace, despite the fact that China’s oil imports fell by 6 million barrels per day in May compared to March.
“Stocks have become a buffer for the oil market. However, even if we see a resumption of oil shipments through the Strait of Hormuz in the near future, the recovery will be slow and gradual. This suggests that inventories are likely to continue to decline in the third quarter, creating the risk of rising prices," ING said in a statement.
This was reported by Reuters.
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