Oil prices are falling as a result of a cease-fire in the Middle East conflict and reports of increased petroleum reserves.
The United Arab Emirates and the Iran-aligned Houthi group hailed a ‘truce’ that would pause military operations on the Saudi-Yemeni border, alleviating some fears about future supply shortages.
The early losses this week follow a drop in oil prices of approximately 13% last week, the worst weekly drop in two years, when US President Joe Biden announced the largest-ever release of US oil reserves.
By 2223 GMT, Brent crude futures had fallen $1.01, or 1%, to $103.38 a barrel. WTI crude futures slid 84 cents to $98.43 a barrel, or 0.9 percent.
The announcement of a UN-brokered cease-fire in Yemen has been hailed by the United Arab Emirates (UAE), according to the UAE’s national news agency WAM. The Iran-aligned Houthi group, which has been fighting a coalition in Yemen that includes the UAE, has also expressed its gratitude for the cease-fire.
According to a UN envoy, the statewide cease-fire is the first in Yemen’s seven-year conflict, and it will allow fuel imports into Houthi-held areas as well as some planes to run from Sanaa airport.
“This was a supply danger, and a ceasefire would alleviate that concern,” said Price Futures Group analyst Phil Flynn.
Since Russia’s invasion of Ukraine in late February, market investors have been concerned about global supplies. Russia has been sanctioned as a result of the invasion.
