Oil got cheaper after Trump's statement on Israel and Hamas. Will the effect last?

Oil temporarily fell in price after U.S. President Donald Trump announced that Israel and Hamas had agreed on the first phase of a U.S. plan to end the war in Gaza. The increased chances of ending the protracted war eased geopolitical tensions in the Middle East. Additional pressure on commodities was exerted by the strengthening of the dollar. However, analysts are not rushing to get their hopes up yet, as there have been "numerous false starts" in the past.

Futures for the benchmark Brent crude oil grade fell 0.5% in trading on October 9: the price of contracts with execution in December fell below $66 per barrel. Contracts for North American oil WTI fell in price by about 0.6% - almost to $62. However, then Brent quotes recovered losses and even began to grow slightly - within 0.1%, according to data from the Intercontinental Exchange.

U.S. President Donald Trump announced on the evening of October 8 that Israel and Hamas had agreed on the first phase of the White House's proposed plan to end the two-year conflict, which involves releasing hostages and withdrawing the Israeli army to agreed positions.

The war in Gaza has supported oil prices as the market has priced in risks to global oil supply should Israel's military conflict with Hamas escalate into a broad regional crisis, Reuters explained.

"WTI quotes are on the weaker side of the pendulum today due to the lower geopolitical risk premium caused by the peace agreement between Israel and Hamas," said OANDA analyst Kelvin Wong as quoted by Reuters.

"The devil, as always, lies in the details, so I would avoid speculation [on the impact of the Ma peace plan on oil prices] for now because of the numerous false starts we have seen in the past," Rystad Energy senior economist Claudio Galimberti said in a note quoted by Reuters.

Michael McCarthy, head of investment platform Moomoo in Australia and New Zealand, believes that the truce in Gaza is unlikely to affect the volume of oil supplies from the Middle East, as the OPEC+ countries have not yet achieved their stated goals to increase production. McCarthy also noted that the strengthening of the dollar against the Japanese yen and the euro has put pressure on commodities - in particular, dollar-denominated oil has become more expensive for investors operating in other currencies, reports Reuters.

According to the agency, the current week could be the best for the U.S. currency this year.

According to the US Energy Information Administration (EIA), global oil reserves will increase by 2026, which will put downward pressure on oil prices, writes Oil & Gas Journal. In its October review of the energy industry (STEO), the agency predicted that Brent crude oil prices will fall to an average of $62 per barrel in the fourth quarter of 2025 and to $52 per barrel in 2026.

This article was AI-translated and verified by a human editor