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Oil prices fall amid hopes for a political solution in Gaza

WTI crude oil per day

It’s unclear how much political risk is currently priced into the oil market, but we may find out soon.

CNN reports that Hamas is considering a new framework proposed by Egypt that calls for the group to release up to 33 hostages kidnapped in Israel in exchange for a pause in hostilities in Gaza. A slow release over several weeks and the release of Palestinian prisoners could lead to lasting calm in the region.

Hamas also joins the negotiations in Cairo, a sign of hope.

The news prompted oil selling today, with WTI falling $1.26 to $82.59, the lowest since Thursday.

Some estimate that oil prices could rise by $8 due to geopolitics, but I think that number is much lower, especially after last week’s failed fighting between Iran and Israel. However, there is no real way to know until we get a ceasefire agreement.

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