Crude oil prices fell sharply on Monday amid easing concerns about oil supply on hopes the diplomatic efforts in the Middle East will help prevent the conflict there from escalating into a bigger regional war.
According to reports, Israel has agreed to hold off its attack on Hamas following pressure from the U.S.
The drop in oil prices comes amidst a delay in a ground level attack that is feared to widen the scope of the conflict.
West Texas Intermediate Crude oil futures for November settled at $85.49, down $2.59, or about 2.94%.
Brent crude futures ended down $2.33, or about 2.5%, at $89.83 a barrel.
“Crude prices are lower as Israel has tentatively held off the highly telegraphed ground invasion of Gaza. The situation remains tense but the latest headlines don’t support an immediate escalation,” says Edward Moya, Senior Market Analyst at OANDA. “Until crude flows are disrupted, it might take a significant escalation in the war for oil prices to surge,” he adds.