Oil pares gains torise about 1%

Israel's peace talks plan with Lebanon erased 5% early gains

HOUSTON:

Oil prices pared gains to rise about 1% on Thursday after Israel said it would start direct negotiations with Lebanon as soon as possible.

Doubts over the durability of a two-week Middle East ceasefire raised concerns about continued restrictions on energy flows through the Strait of Hormuz, sending prices up more than 5% earlier in the session. Those gains were later erased after Israeli Prime Minister Benjamin Netanyahu said he had given instructions for Israel to begin peace talks with Lebanon that would also include the disarming of Hezbollah.

Brent crude futures were up 90 cents, or 1% at $95.65 a barrel at 1658 GMT, easing from a high of $99.50 earlier in the session. US WTI crude also pared gains, rising $3 or 3.2% at $97.39, after hitting a session high of $102.70.

Both benchmarks fell below $100 per barrel in the previous trading session, with WTI recording its biggest decline since April 2020, on optimism that the ceasefire would result in a reopening of the strait.

Israel, however, bombed more targets in Lebanon on Thursday, putting the ceasefire in jeopardy after its biggest attacks of the war on its neighbour killed more than 250 people and threatened to torpedo Donald Trump's truce from the outset.

Questions also lingered over the effectiveness of the ceasefire as ship traffic through the Strait of Hormuz fell to well below 10% of normal volumes on Thursday after Iran asserted control by warning vessels to remain within its territorial waters and prices for some physical oil grades hit fresh.