Oil prices fall on hopes for a political solution in Gaza

It’s not clear how much political risk is currently priced into the oil market but we may soon find out.

CNN reports that Hamas is considering a new framework proposed by Egypt that
calls for the group to release as many as 33 hostages kidnapped from
Israel in exchange for a pause in hostilities in Gaza. A slow release over several weeks and the release of Palestinian prisoners could lead to a durable calm in the area.

Hamas is also joining talks in Cairo, in a hopeful sign.

The news has prompted some selling in oil today with WTI down $1.26 to $82.59, which is the lowest since Thursday.

Some estimate as much as an $8 premium in oil prices due to geopolitics but I think it’s much lower, particularly after the Iran-Israel fighting last week fizzled. However there’s no real way of knowing until/unless we get a ceasefire deal.

This article was written by Adam Button at www.forexlive.com.