Oil Prices Drop Over $2 Following Reports of Israel-Lebanon Ceasefire Agreement

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Oil prices fell more than $2 on Monday after reports surfaced that Israel and Lebanon had agreed to terms for a ceasefire in their conflict, according to unnamed senior U.S. officials. Brent crude futures dropped by $2.02, or 2.69%, to $73.15 per barrel, while U.S. West Texas Intermediate crude futures declined by $2.08, or 2.92%, to $69.16 per barrel. Israel confirmed that it is moving toward a ceasefire with Hezbollah, although key issues remain unresolved. Lebanese officials expressed cautious optimism but were wary of Israeli Prime Minister Benjamin Netanyahu's trustworthiness.

Giovanni Staunovo of UBS explained that the ceasefire news likely contributed to the price drop, noting that while there has been no disruption to oil supply due to the Israel-Hezbollah conflict, the risk premium in oil had already been low before the recent decline. Phil Flynn, senior analyst at Price Futures Group, commented that oil markets are heavily influenced by concerns over supply disruptions. While news of a ceasefire could act as a bearish factor, Flynn emphasized the need for further details to assess the situation fully.