Oil prices ease as Iran signals progress in Gaza talks

February 12, 2024 (MLN): Oil prices fell on Monday after rising more than 6% last week, as Iran’s foreign minister suggested that the Israel-Hamas conflict could be moving closer to a diplomatic solution.

However, trading volumes were thin as a multitude of Asian markets were closed for the Lunar New Year.

Brent crude was trading at $81.91 per barrel by 11:05am PST, down by 0.34% on the day. This comes after it gained 6.3% last week.

While West Texas Intermediate crude (WTI) traded near $76.57 per barrel, down by 0.35% on the day.

Iran’s Hossein Amirabdollahian held talks in recent days in Beirut, including with senior officials from Hamas, as Bloomberg reported.

“Developments in Gaza are moving toward a diplomatic solution,” he said, without offering any specifics on timing.

Meanwhile, the Israeli military conducted a series of strikes in Gaza on targets in the southern city of Rafah. Prime Minister Benjamin Netanyahu had said on Sunday that civilians would be directed out of harm’s way before a military operation.

Oil has traded within a band of about $10 for most of this year as nervousness over the conflict in the Middle East has been partially offset by ample global supply and a shaky demand outlook, especially in China, the second-biggest consumer.

Production from the Permian Basin of West Texas and New Mexico, which helped the US export an unprecedented volume last year, is seen hitting another record this year. Output is said to rise almost 5% to 6.4 million barrels a day by the end of 2024, major pipeline operator Plains All American Pipeline LP said in its fourth-quarter earnings presentation.

There are additional downside risks to demand forecasts for China, Goldman Sachs Group Inc. analysts said in a note, citing a surge in electric vehicle sales and conversations with local consumers.

Traders will this week be looking to monthly reports from both OPEC and the International Energy Agency for further indications of supply and demand.