(MENAFN- Your Mind Media ) Energy markets recorded a decline in crude oil prices. WTI crude was trading around $61.41 per barrel, while Brent crude hovered near $64.06, following news of a ceasefire agreement between Israel and Hamas. Mediated by the United States, this pact includes the cessation of hostilities, a partial withdrawal of Israeli forces from Gaza, and a hostage-for-prisoner exchange. It could ease some of the geopolitical risk premium that had weighed on oil markets.

The immediate effect of the agreement was a reduction in fears of a regional escalation that could disrupt energy supply routes. The lower risk in the Middle East, particularly in areas near the Red Sea, could facilitate smoother crude flows to Asia and Europe. Some analysts believe this first step could pave the way for more ambitious negotiations with Iran, adding another factor of relief to crude oil prices.

However, the situation is not free from structural tensions. The OPEC+ alliance announced a moderate increase in production for November, lower than many had anticipated. This measured increase helped calm concerns about a potential oversupply, though it does not eliminate the possibility of market saturation if demand weakens.

Several key uncertainty factors persist. The risk of a partial U.S. government shutdown remains, which could affect public spending credibility and macroeconomic data. The Federal Reserve maintains a cautious stance on potential rate cuts, limiting expectations of economic recovery. Additionally, U.S. sanctions on Iran and China revive latent tensions in the energy supply chain.

Another source of pressure comes from trade. The United States doubled tariffs on Indian exports in retaliation for its Russian crude imports. This measure not only intensifies trade tensions but could also affect oil flows between these two major economies. Retaliatory actions and countermeasures may reduce crude demand in key markets, especially in Asia.

Meanwhile, U.S. production is expected to reach record levels in 2025. This growth increases the risk of a global oversupply. While it strengthens the country’s position as a dominant market player, it also carries the risk of inventory accumulation, which could depress prices.

In the medium term, the balance will depend on demand elasticity, OPEC+ decisions, and political developments in the Middle East. If the truce holds and diplomatic negotiations progress, prices could stabilize or even rebound. However, if regional tensions flare up again or global demand weakens, the market could face a more pronounced correction.

In conclusion, the recent ceasefire between Israel and Hamas provided a temporary relief to crude oil prices by reducing geopolitical risks, but the outlook remains fragile. The moderate production increase by OPEC+, global sanction pressures, and the surge in U.S. output act as countervailing forces. While conditions do not suggest an immediate crash, they also do not guarantee sustained gains unless demand strengthens sharply or new tensions emerge. In the oil world, calm may be only temporary."

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