Oil plunges as Israel and Hezbollah reach a ceasefire deal

The front-month ICE Brent futures shed $0.20/bbl to settle at $72.81/bbl on Tuesday, after US President Joe Biden announced a ceasefire deal in Lebanon.

PHOTO: Flags of Israel and Lebanon. Getty Images

Israeli Prime Minister Benjamin Netanyahu said the announcement came as the country's war cabinet approved the ceasefire agreement, which took effect early Wednesday morning across the Lebanon-Israel border.

The deal, between Israel and the Lebanon-based armed group, was mediated by Washington and France, according to the official statement. It is expected to end hostilities between Israel and Hezbollah militants.

“I just spoke with the prime minister of Israel and Lebanon. I'm pleased to announce that their governments have accepted the United States' proposal to end the devastating conflict between Israel and Hezbollah,” US President Joe Biden said at a press brief at the White House.

Oil prices came under pressure following this news as some supply disruption concerns in the Middle East eased.

“Crude futures were trading within a few cents of the previous session’s lower settle early Wednesday as the market continued to digest [late] Tuesday’s news that Israel’s security cabinet had approved a ceasefire deal with the Hezbollah militants,” VANDA Insights’ founder and analyst Vandana Hari said.

However, it is important to note that the ceasefire deal does not apply to the ongoing conflict between Israel and Iran-backed Hamas militants in the Gaza Strip.

By Aparupa Mazumder

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