Oil prices steady after Israel-Hezbollah ceasefire deal as Opec+ meeting looms

Opec+ will meet on December 1 to discuss output policy

People wave Hezbollah flags in Lebanon's Tyre after a ceasefire between Israel and Hezbollah came into effect on Wednesday. Reuters

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Oil prices remained steady on Wednesday after Israel and Hezbollah agreed to a ceasefire, while traders weighed the possibility of Opec+ further extending output cuts.

Brent, the benchmark for two thirds of the world's oil, was up 0.03 per cent at $72.83 a barrel at 10.26am UAE time. West Texas Intermediate, the gauge that tracks US crude, was trading flat at $68.77 a barrel.

A ceasefire agreement between Israel and Hezbollah in Lebanon took effect after US President Joe Biden announced that both sides had accepted a deal mediated by the US and France.

The truce will bring to a halt a war that has forced tens of thousands of people in Israel and hundreds of thousands more in Lebanon to flee their homes.

“I just spoke with the prime ministers of Israel and Lebanon,” Mr Biden said from the White House Rose Garden. “I'm pleased to announce that their governments have accepted the United States' proposal on the devastating conflict between Israel and Hezbollah.”

On the supply side, the Opec+ alliance of oil-producing countries is expected to meet on December 1, where they will discuss further delaying plans to bring back barrels to the market.

Opec+ has delayed the easing of voluntary production cuts of 2.2 million barrels per day twice. Initially, they were set to be gradually phased out starting last month. However, due to market conditions, the start of the phasing out was postponed to January.

“The consensus on Opec+ to further roll-out the extension for cuts is strong,” said Mukesh Sahdev, global head of commodity markets, oil, at Rystad Energy.

“However, the critical question is how long and is there a potential for surprise and signals for the emergence of a new [Opec] strategy?” Mr Sahdev said in a research note this week.

The International Energy Agency expects a crude surplus of 1 million bpd next year, with China's oil demand growth projected to slow to 140,000 bpd – just a tenth of last year's increase of 1.4 million bpd.

Meanwhile, Opec has estimated oil demand growth at 1.8 million bpd for this year and 1.5 million bpd for 2025.