WASHINGTON (dpa-AFX) - Crude oil tumbled on Friday amid swift developments in the Middle East as the first phase of Gaza Peace Plan takes effect, confirming the return of peace in the region where a drawn-out war claimed thousands of lives so far.
WTI Crude Oil for November delivery was last seen trading down by $2.69 (or 4.37%) at $58.82 per barrel.
Recently, U.S. President Donald Trump proposed a 20-point peace plan to end the bitter conflict between Israel and Palestine.
The first phase of the peace plan has now taken effect. The Israeli military is pulling out of Gaza, enabling thousands of displaced Palestinians to return to (what is left of) their homeland.
On its part, Hamas must honor its commitment to release Israeli hostages under its captivity in the next 72 hours.
These activities eased the risk premium linked to the Red Sea and Suez Canal with the threat of Houthi attacks virtually eliminated, putting to rest oil and energy transit concerns and weighing on oil prices.
The steep drop by the price of crude oil also came as U.S. President Donald Trump threatened to massively increases tariffs on China in retaliation for its expansion of export controls on rare earths.
Trump accused China of 'becoming very hostile' in a post on social media platform Truth Social and said he would no longer meet with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation forum in South Korea, because 'now there seems to be no reason to do so.'
The OPEC+ alliance announced on Sunday that the group had agreed on plans to raise output by 137,000 barrels per day in November, much less than what was earlier speculated in sections of the media. These numbers have limited oversupply concerns.
Starting in late 2022, the cartel implemented voluntary production cuts which came close to around 2.5 million barrels per day by September 2025.
Yesterday, in an effort to stop Iran's finances for its nuclear ambitions by selling oil, the U.S. imposed sanctions on around 100 individuals, entities, and vessels along with a Chinese independent refinery and terminal which have helped Iran's oil and petrochemicals trade.
OPEC's number two producer, Iraq is showing brisk action in its oil trade. Weeks before, the nation resumed its oil exports to Turkey from the Kurdistan region.
U.S. oil major ExxonMobil is returning to Iraq after roughly two years to develop the Majnoon oil field where oil reserves are estimated to be around 38 million barrels. Reportedly, the company is also planning to build crude oil storage facilities closer to demand hubs in Asia, the U.S., and Europe.
In the U.S., New York Fed President John Williams and San Francisco Fed President Mary Daly have indicated that additional rate cuts are likely this year due to perceived potential risks in the labor market.
As crude oil is a dollar-denominated commodity, a meeting of the U.S. Federal Reserve this month-end is keenly anticipated by traders wherein decisions on rate cuts are slated to be announced that would impact dollar value and eventually oil prices.
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