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Oil prices dropped close to their lowest levels in 2024 on Tuesday morning, following increased hopes of a ceasefire in the Israel-Hamas war.

Brent crude oil prices inched down 1.03% to $76.8 per barrel on Tuesday morning, a drop of 4.39% this week and 6.37% this month. This was close to this year’s lowest point of $75.90 per barrel seen on 2 January. 

Crude oil prices decreased 1.05% to $72.8 per barrel on Tuesday morning. This was a plunge of 6.56% this week and 6.62% this month. 

On the other hand, natural gas prices were doing better, rising 3.84% this week and trading at $2.2(€1.99) per MMBTu on Tuesday morning. Similarly, TTF gas prices were also on the rise, gaining 0.94% on the day to trade at €39.89/MWh. 

Ceasefire hopes regarding the Israel-Hamas war have risen, following Israel’s recent acceptance of a bridging proposal suggested by the US. However, Hamas is yet to do the same.

There are a number of points of difference that need to be worked out. These include Palestinian freedom of movement, as well as Israel’s ongoing military presence in Gaza.

Before talks with Israel’s president Isaac Herzog earlier this week, US Secretary of State Antony Blinken, highlighted the importance of both sides agreeing to a ceasefire.

There has been increasing pressure for both parties to reach a hostage deal, which Blinken signalled during talks with Israel, was a high priority. 

Blinken told the BBC: “This is a decisive moment, probably the best, maybe the last opportunity to get the hostages home, to get a ceasefire and to put everyone on a better path to enduring peace and security. 

“I’m here as part of an intensive diplomatic effort on President Biden’s instructions to try to get this agreement to the line and ultimately over the line. It is time for everyone to get to ‘yes’ and to not look for any excuses to say ‘no’.” 

Energy companies under pressure as oil prices fall

The dampened oil prices also weighed heavily on energy company shares, which were further exacerbated by lagging Chinese demand. That is mainly due to the Chinese economy seeing weaker growth, higher unemployment and less industrial output. 

Danni Hewson, head of financial analysis at AJ Bell, said in an email note: “The FTSE 100 started off Tuesday on the back foot despite gains in the US and Asia overnight as its heavy weighting towards oil stocks proved a headwind. 

“Hopes of a ceasefire in Gaza and continuing concerns about Chinese demand combined to drive oil prices to their lowest levels since the beginning of August and that put index heavyweights BP and Shell under pressure. 

“While oil did dip below $76 (€68.60) around the beginning of August, it has consistently traded above $80 (€72.21) per barrel for much of this year. If oil prices remain at these levels, it could help reduce inflationary pressures and give central banks more room to make interest rate cuts.”