Oil Prices Steady as Gaza Ceasefire Eases War Premium Amid OPEC Outlook

Oil prices were largely unchanged in early Asian trade on Friday, stabilizing after a 1% drop in the previous session. The market’s earlier war risk premium eased following a ceasefire agreement between Israel and Hamas, marking the first phase of a U.S.-brokered plan to end the Gaza conflict.

Brent crude futures edged up 9 cents, or 0.1%, to $65.31 per barrel by 0044 GMT, while U.S. West Texas Intermediate (WTI) crude rose 12 cents, or 0.2%, to $61.63. Both benchmarks remained on track for weekly gains of around 1.2%, recovering from steep losses last week.

The ceasefire deal, ratified by Israel’s government, includes a halt to hostilities, a partial Israeli withdrawal from Gaza, and the release of hostages by Hamas in exchange for the freedom of hundreds of Palestinian prisoners. Analysts said the breakthrough significantly reduced geopolitical tensions that had fueled oil price volatility over the past two years.

According to ANZ analyst Daniel Hynes, the agreement “shifted market focus back to the looming oil surplus, as OPEC moves forward with unwinding production cuts.” The Organization of the Petroleum Exporting Countries and its allies (OPEC+) recently agreed to a smaller-than-expected output hike for November, slightly easing oversupply concerns.

However, broader market sentiment remains cautious. Investors are monitoring the potential impact of a prolonged U.S. government shutdown, which could weigh on economic growth and weaken oil demand. Meanwhile, uncertainty surrounding stalled peace talks in Ukraine continues to support prices, given ongoing sanctions on Russia — the world’s second-largest oil exporter.

Despite geopolitical developments, the oil market remains finely balanced, with traders closely watching OPEC+ production trends and global demand recovery signals as key drivers for near-term price direction.