Key insights
- Oil prices declined on news of a ceasefire between Israel and Lebanon, raising hopes for broader Middle East de-escalation and potential US-Iran talks. Trump's comments on Iran handing over uranium further fueled optimism. Weaker global oil demand forecasts from OPEC and IEA added to the downward pressure. This could lead to lower inflation expectations and slightly ease pressure on the Fed, but the impact is limited.
Investing.com-- Oil prices fell sharply in early Asian trade on Friday after the U.S. announced a ceasefire between Israel and Lebanon, spurring more hopes for peace in the Middle East.
Crude was also headed for a second week of deep losses amid growing hopes for more U.S.-Iran peace talks, especially after President Donald Trump signaled that a lasting ceasefire deal was close.
West Texas Intermediate crude futures fell 1.4% to $89.88 a barrel by 19:14 ET (23:14 GMT). They were also trading down over 3% for the week.
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Trump on Thursday said a 10-day ceasefire between Israel and Lebanon after officials from both countries met in Washington. Trump also said he will invite Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun for talks in the White House.
The ceasefire deal, which appeared to be holding by the early hours of Friday, spurred bets on more de-escalation in the Middle East. Lebanon’s inclusion in a ceasefire was a key demand from Iran.
“I hope Hezbollah acts nicely and well during this important period of time,” Trump said in a social media post, referring to the Lebanese paramilitary group that is in conflict with Israel.
Trump had earlier struck an optimistic note on Iran, claiming that Tehran had agreed to hand over its uranium holdings. But this came as the U.S. naval blockade against the country remained in full effect, while the U.S. military also threatened more action against Tehran.
Still, a ceasefire between the two countries appeared to be holding, with no new reports of strikes for nearly a week. The ceasefire ends on April 21, with Trump suggesting that he may extend the agreement.
Oil was pressured by growing bets that the U.S. and Iran will meet for more peace talks before the ceasefire expires. Additionally, forecasts of weaker global oil demand from industry groups OPEC and IEA also weighed.