Oil prices fell more $2 per barrel on Monday after reports emerged that Israel and Lebanon have agreed to the terms of a deal to end the Israel-Hezbollah conflict. Brent crude for January delivery fell 2.75% to trade at $73.10 per barrel at 11.45 am ET while WTI crude fell 2.70% to $69.36 per barrel. Reuters reported on Monday that a senior Israeli official said the country’s cabinet would meet on Tuesday to approve a ceasefire deal with Hezbollah, while a Lebanese official said Beirut had been told by Washington that an accord could be announced “within hours”.
“It seems the news of a ceasefire between Israel and Lebanon is behind the price drop, though no supply has been disrupted due to the conflict between the two countries and the risk premium in oil has been low already before the latest price decline,” said Giovanni Staunovo of UBS.
Earlier in the year, Israeli officials had said earlier that a deal to end the war was getting closer though some issues remained. However, Lebanese officials have voiced guarded optimism, saying Israeli Prime Minister Benjamin Netanyahu was not to be trusted.
Last week, oil prices notched their biggest weekly gains since late September after Russia fired a hypersonic missile at Ukraine in what appears to be a warning following strikes by Kyiv on Russia using U.S. and British weapons. Russian President Vladimir Putin said on Friday that Russia would keep testing the hypersonic Oreshnik missile it fired at Ukraine with plans to start producing the weapon in large quantities.
“I will add that there is no countermeasure to such a missile, no means of intercepting it, in the world today. And I will emphasise once again that we will continue testing this newest system. It is necessary to establish serial production,” Putin said in televised comments.
Russia’s new weapon is an intermediate-range, nuclear-capable ballistic missile that had not been previously mentioned in public. According to Putin, air defences cannot intercept the Oreshnik, which attacks at a speed of Mach 10. Hypersonic missiles can manoeuvre mid-flight, making them harder to track and intercept.
Source: By Alex Kimani from Oilprice.com