Oil prices slip as Israel-Hamas ceasefire eases middle east tensions

October 10, 2025 (MLN): Oil prices fell on Friday, extending losses from the previous session when they dropped about 1.6%, as the market’s risk premium eased following an agreement between Israel and Hamas on the initial phase of a Gaza ceasefire plan.

Brent crude futures went up by $0.88, or 1.35%, to $64.34 per barrel.

West Texas Intermediate (WTI) crude futures decreased by $0.81, or 1.32%, to $60.70 per barrel by [5:00 am] PST.

Bjarne Schieldrop, chief commodities analyst at SEB, said the truce has brought a sense of relief to the energy market. “Finally having some kind of peace process in the Middle East is lowering the shoulders a little bit,” he noted, adding that the deal could reduce concerns over crude carriers navigating through the Suez Canal and the Red Sea.

The ceasefire, part of U.S. President Donald Trump’s peace initiative, was ratified by Israel’s government on Friday.

Under the agreement, hostilities will cease, Israel will begin a partial withdrawal from Gaza, and Hamas will release all remaining hostages in exchange for hundreds of Palestinian prisoners held by Israel.

The development comes after months of heightened maritime risk, with Iran-backed Houthi militants in Yemen attacking vessels they claimed were linked to Israel since 2023, in solidarity with Palestinians.

Despite the latest dip, both oil benchmarks are poised to close the week higher Brent crude up roughly 1% and West Texas Intermediate (WTI) gaining around 0.6% following a sharp selloff last week.

Earlier in the week, oil prices had climbed nearly 1% to a one-week high amid stalled negotiations for a Ukraine peace deal, signaling that sanctions on Russia the world’s second-largest oil exporter might persist.

Analysts say the Gaza ceasefire has shifted market focus back to fundamentals, particularly supply dynamics as OPEC+ gradually unwinds its production cuts. “The deal allows attention to return to the looming oil surplus,” said Daniel Hynes, commodities strategist at ANZ.

OPEC+’s smaller-than-expected production increase for November, announced last Sunday, has also helped temper oversupply concerns.

“Markets’ expectations for a sharp ramp-up in crude supply have not manifested themselves in substantially lower prices,” BMI analysts wrote in a note.

“The most recent rise in production is lower than previously feared, contributing to a slight uptick in prices for the week.”

Meanwhile, investor sentiment remains cautious amid fears that a prolonged U.S. government shutdown could weigh on the world’s largest oil-consuming economy and curb demand growth.

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