Commodity trading: Oil prices ease on possible Middle East ceasefire talks

Oil prices dipped about 1% in volatile trading on Thursday amid reports that the U.S. and Israel are seeking to revive discussions on a potential ceasefire in Gaza. Brent futures closed 58 cents, or 0.8%, lower at $74.38 a barrel, while U.S. West Texas Intermediate (WTI) crude also fell 58 cents, or 0.8%, finishing at $70.19.

Ceasefire talks are expected to restart

According to two sources familiar with US intelligence, both documents related to Israel that surfaced on social media last week were widely available intelligence products. However, at least one seems to have been scanned from an official briefing book. Investigators are working to determine where the documents were printed and who had access to them. The number of individuals who could have printed these pages is relatively small, which sources indicate is a crucial starting point for the investigation.

US officials have expressed that the concern lies not in the content of the documents, but in the fact that they were leaked at all; this breach has remained a topic of concern within national security circles in Washington throughout the week.

Ceasefire talks are anticipated to resume as diplomatic efforts intensify, particularly involving the U.S. and Israel. The discussions aim to address the ongoing conflict in Gaza and seek a peaceful resolution. Both sides are under pressure to explore options for de-escalation amid mounting casualties and humanitarian concerns.

The potential for renewed negotiations raises hopes for a temporary halt in hostilities, allowing for much-needed aid to reach affected civilians. While challenges remain, the commitment to re-engage in dialogue signals a willingness to find common ground and mitigate the escalating violence in the region.

Iran's Oil Production and Geopolitical Influence

"(The) energy complex continues to zig and zag as Middle East risk premium expands and contracts almost daily," analysts at energy advisory firm Ritterbusch and Associates said in a note. After Iran fired missiles at Israel on Oct. 1, Brent crude surged about 8% during the week ended Oct. 4 on worries Israel would attack Iran's oil infrastructure. It fell about 8% in the week ended Oct. 18 on reports Israel would not hit energy infrastructure, easing fears of supply disruptions.

Iran is a member of the Organization of the Petroleum Exporting Countries (OPEC) and produced approximately 4 million barrels per day (bpd) of oil in 2023, according to data from the U.S. Energy Information Administration. Analysts and U.S. government reports indicate that Iran is projected to export around 1.5 million bpd in 2024, an increase from an estimated 1.4 million bpd in 2023. Iran supports various groups that are involved in conflicts against Israel, including Hezbollah in Lebanon, Hamas in Gaza, and the Houthis in Yemen.

DEMAND WORRIES

In Europe, business activity in the Eurozone stalled once again this month, remaining in contraction as both domestic and international demand declined, despite companies only marginally increasing their prices, according to a survey released on Thursday.

In the UK, optimism among businesses has plummeted, as indicated by two surveys published the same day, just six days before finance minister Rachel Reeves presents the new government's first budget, which aims to balance tax increases with growth initiatives.

In the U.S., new applications for unemployment aid unexpectedly decreased last week; however, the number of individuals collecting benefits in mid-October reached its highest level in nearly three years, suggesting that job seekers are facing increasing challenges in finding new employment.

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