Oil prices drop on hopes of Middle East peace deal

Oil prices dipped on Monday and WTI price plunged from $71.4 to $68.8 per barrel. If oil prices retreat, they may encounter support near $66.9 per barrel, while resistance may be found near $71.7 per barrel.

Tensions between Russia and Ukraine flared last week boosting oil prices. Geopolitical tensions cooled over the weekend, however, leading to a drop in oil prices. Concerns of a broadening conflict in the Middle East have also boosted oil prices in the past year. The conflict in the Middle East, however, has been raging for over a year without significantly affecting oil supply and distribution, and markets are starting to ignore this risk. In addition, reports that Israel and Lebanon have agreed to the terms of a peace deal that will end the Israel-Hezbollah conflict, propped up oil prices on Monday.

Focus this week will be on the OPEC+ meeting on Saturday, December 1st. Comments from members of the OPEC+ consortium this week are likely to cause volatility in oil prices. OPEC’s December meeting holds special interest, as the organization is expected to announce its output plans for the year ahead. With a lull in geopolitical tensions causing oil prices to drop, traders will be waiting for an extension of OPEC’s oil production cuts into 2025. 

Oil prices are kept in check by high central banks’ interest rates. Rate cut expectations have been fluctuating in the past couple of weeks, with odds of a December rate cut hovering near 55%.

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Written by:
Myrsini Giannouli

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