Oil Prices Hold Steady Amid Gaza Ceasefire and US Sanctions

• Oil steadies after Israel-Hamas ceasefire; Brent futures $65.30, WTI futures $61.14, weekly +1%.

• OPEC+ output rise supports oil; prices fall 1.6% after Israel-Hamas ceasefire.

• US sanctions target 100 tied to Iran oil, including China’s Shandong refinery, tightening supplies.

Oil prices held steady in early Asian trading on Friday following the announcement of a ceasefire between Israel and Hamas. This development led traders to reduce the geopolitical risk premium previously factored into prices. However, fresh U.S. sanctions against Iran suggested that supply constraints could tighten in the future. Despite some improvement, prevailing worries about abundant supply and weak demand persisted, as the market prepared for potentially softer U.S. fuel consumption during the upcoming winter months.

By 20:29 ET (00:29 GMT), December Brent futures inched up 0.1% to $65.30 per barrel, while West Texas Intermediate(WTI) crude futures  gained 0.2% to $61.14 per barrel. Both benchmarks have risen approximately 1% over the course of the week.

Earlier this week, oil prices found some support after OPEC and its allies (OPEC+) increased output by less than anticipated. This modest production hike alleviated some fears of an oversupply glut. However, prices retreated 1.6% on Thursday after the first phase of a U.S.-mediated ceasefire between Israel and Hamas was announced.

Under the ceasefire deal, Hamas is set to release all hostages, and Israel will halt its airstrikes and withdraw forces from Gaza. This agreement represents the initial step of a broader 20-point plan proposed by then-U.S. President Donald Trump, aiming towards Gaza’s eventual self-governance.

While the ceasefire boosted market sentiment, it triggered a drop in oil prices as traders adjusted to a diminished risk premium connected to Middle Eastern tensions. The nearly two-year conflict had previously supported prices amid fears of possible supply disruptions.

Offsetting larger price declines, the U.S. introduced new sanctions on Thursday targeting approximately 100 individuals tied to Iran’s oil sector. The targeted parties include China’s Shandong Jincheng Petrochemical Group, described by the U.S. as an independent "teapot" refinery that has purchased significant volumes of Iranian crude.

Additional sanctions also targeted several tanker operators and oil terminal firms involved in shipping Iranian oil. The U.S. government has repeatedly accused Iran of channeling oil revenues into its nuclear program. These fresh sanctions are expected to disrupt oil shipments to Asia, where much of Iran’s oil is exported, potentially tightening supplies in the months ahead.