A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023.
Alexander Manzyuk | Reuters
Oil prices fell after U.S. President Donald Trump said Israel and Lebanon had agreed to a 10-day ceasefire following talks in Washington.
U.S. crude oil futures for May delivery fell 1.45% to $93.32 per barrel. International benchmark Brent for June delivery declined 1.11% to $98.36 per barrel.
The truce is set to begin at 5 p.m. ET, Trump said in a Truth Social post. He added that Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun would be invited to the White House for what he described as the first meaningful talks between the two countries since 1983.
The U.S. State Department said both sides aimed to create conditions for lasting peace, including mutual recognition of sovereignty. The department said the effort included improved border security and reaffirmed Israel’s right to self-defense.
It also noted shared concerns over non-state armed groups from undermining Lebanon’s sovereignty.
Trump said he expects Lebanon to “take care of Hezbollah,” the Iran-backed militant group. The developments raised hopes of a broader resolution to the Middle East conflict that began on Feb. 28.
Oil prices were drifting lower on expectations that the U.S. and Iran could extend their ceasefire by another two weeks and potentially resume talks to end the conflict, ING said.
“However, the physical market is becoming tighter every day that passes without a restart of oil flows through the Strait of Hormuz,” ING analysts said in a note.
Even accounting for pipeline rerouting and limited tanker movements, ING estimates roughly 13 million barrels per day of supply has been disrupted, a figure that could rise further under a U.S. blockade.
“The key upside risk for the market is that peace talks between the US and Iran break down. This isn’t an unrealistic scenario, given that US and Iranian demands remain fairly wide apart.”