Investing.com — Oil prices were little changed in early Asian trading on Monday, stabilizing after rising sharply last week as traders digested reports that Israel was nearing a ceasefire with Lebanese militant group Hezbollah. .
The outlook for Middle East conflicts to be less severe portends a smaller risk premium for oil, although prices have hovered near two-week highs in recent days amid rising tensions between Russia and Ukraine.
Prices that expired in January fell slightly to $75.14 per barrel, and by 7:47 p.m. ET (12:47 JST), the price had inched down to $70.75 per barrel.
Israel moves closer to ceasefire with Hezbollah – Axios
Axios reported on Sunday that Israel and Hezbollah are close to signing a cease-fire agreement to end hostilities in Lebanon, citing Israeli and US officials. The Israeli daily Times of Israel also reported that Prime Minister Benjamin Netanyahu is holding high-level talks regarding the deal, mediated by US officials.
Israeli officials are considering a draft agreement that would include a 60-day transition period during which Israeli troops would withdraw from southern Lebanon and Hezbollah would move its heavy weapons north of the Litani River.
The agreement is also expected to include the establishment of a U.S.-led oversight committee.
The prospect of a ceasefire between Israel and Hezbollah signals easing tensions in the Middle East, reducing the risk premium for oil. Traders feared that escalating tensions could disrupt supplies from the oil-rich region.
Still, reports of a ceasefire were overturned after Hezbollah fired more rockets around Tel Aviv after Israel launched a major offensive in Beirut over the weekend.
Iran’s announcement that it would increase its nuclear fuel production capacity also heightened tensions in the Middle East.
Oil prices hit more than two-week high amid tensions between Russia and Ukraine
Oil prices have risen sharply in recent trading due to rising tensions between Russia and Ukraine, and are hovering near their highest level in more than two weeks.
Ukraine has begun using long-range, Western-made missiles to attack deeper targets inside Russia, a move that has angered Moscow.
The Russian government responded by lowering its threshold for nuclear retaliation, while attacking Ukraine with an experimental hypersonic missile.
“Recent exchanges indicate that the war has entered a dangerous new phase and there are growing concerns about supply disruptions,” ANZ analysts said in a note.
