Oil prices fell significantly on Tuesday, with both Brent and U.S. West Texas Intermediate (WTI) crude futures declining over 4% due to news of a potential ceasefire between Hezbollah and Israel. Brent crude settled at $77.18 per barrel, down $3.75 (4.63%), while WTI closed at $73.57, also down $3.57 (4.63%).
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The market reacted to the possibility of a ceasefire, although concerns about potential attacks on Iranian oil infrastructure provided some support for prices.
Analysts noted that the market remains highly sensitive to headlines regarding the conflict, leading to volatility.
Prior to this drop, oil prices had risen above $80 per barrel for the first time since August, driven by concerns over escalating conflict in the Middle East.
The Israeli military has warned people in southern Beirut, indicating ongoing tensions in the region.
In the U.S., crude oil stocks rose by nearly 11 million barrels last week, while fuel inventories fell, according to the American Petroleum Institute.
Despite the recent price drop, analysts suggest that an attack on Iranian oil infrastructure is unlikely, which may keep downward pressure on prices if Israel shifts its focus elsewhere.