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Crude oil prices were set for a weekly decline despite gains made during the course of the week largely because of reports that Israel and Hamas were negotiating a ceasefire.
Bloomberg cited unnamed sources as saying negotiations were ongoing and Israel’s Jerusalem Post quoted the Qatari foreign ministry as saying that Hamas had given its initial approval to a ceasefire deal and a hostage deal late on Thursday.
The report quoted an unnamed Palestinian official as saying a final approval might not be forthcoming, however
"Instead, I expect them to send a positive response and reaffirm their demands: for the agreement to be signed, it must ensure Israel will commit to ending the war in Gaza and pull out from the enclave completely," the official said.
Meanwhile, France24 reported the Israeli army was advancing on Rafah, in the south, also suggesting an actual ceasefire would still be a while.
Following the news about the deal, however, oil prices softened, after the Red Sea crisis prompted some solid gains earlier in the week.
Additional support for the benchmarks came from OPEC+, which decided on Thursday to leave its production policy unchanged, curbing combined output by 2.2 million bpd.
Even so, "The recent reports on the progress toward an extended Israel-Hamas ceasefire, which could fizzle current geopolitical stress (are) keeping oil investors on the sidelines," Priyanka Sachdeva from Philip Nova told Reuters.
“It’s no surprise that geopolitical risk premium placed on crude is fading as hopes of progress on Gaza ceasefire talks grow,” Vishnu Varathan from Mizuho Bank told Bloomberg. “But a conflict this entrenched and polarized is unlikely to have a linear, unfettered and short path to resolution.”
Meanwhile, the Yemeni Houthis continued targeting ships in the Red Sea, with the latest attack announced by the group itself on Thursday, on an unidentified British merchant ship.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.