• Oil & Gas - News
  • Updated: February 02, 2024

Oil prices dip on Israel-Hamas truce reports, US refinery outage

Oil prices dip on Israel-Hamas truce reports, US refinery ou

Oil prices witnessed a decline of over 2% on Thursday, owing to unsubstantiated reports of an Israel-Hamas truce. This, combined with a major refinery in the United States shutting down due to a power outage, added to the reduction.

Despite a Qatari official's claims that there is no ceasefire, it was restated that Hamas had responded positively to a ceasefire request made earlier in the week.

Brent crude prices declined $1.85, or 2.5%, to $78.70 per barrel, while U.S. West Texas Intermediate crude futures fell $2.03, or 2.7%, to $73.82.

Oil prices have recently risen as a result of heightened tensions in the Middle East. Persistent attacks by Yemen-based Houthi troops on tankers transiting the Red Sea have resulted in higher expenses and disruptions in global oil trading.

In addition, the Houthi group has stated that it will continue to strike US and British warships, citing self-defense.

As of November, OPEC+ had adopted voluntary oil production cuts totaling 2.2 million barrels per day (bpd) to support oil prices.

Oil prices rose in early trading following Federal Reserve Chair Jerome Powell's comments on Wednesday. Powell noted that interest rates had peaked and were projected to fall in the coming months. He also cited a decreased trend in inflation and expected continued economic development.

Lower interest rates and economic growth typically boost oil demand.

While oil prices have dropped significantly, they remain greater than the benchmark price of crude oil of $77.96 per barrel, as expected in the 2024 budget. This means that the decline poses no threat to Nigeria's oil-related revenue predictions.

OPEC had reduced Nigeria's 2024 production limit below the budgeted target. However, sources who spoke with Reuters said the cartel would meet later in March to consider extending the production limits beyond the first quarter.

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