Oil prices muted amid Gaza ceasefire talk; OPEC+ maintains supply cuts

Investing.com-- Oil prices rose slightly in Asian trade on Monday as the OPEC+ maintained its current pace of production cuts until the second quarter, although calls from top U.S. officials for an immediate Israel-Hamas ceasefire dulled crude’s momentum.

Still, oil markets were sitting on strong gains over the past two weeks, benefiting from expectations of tighter supplies this year, while optimism over an eventual decline in U.S. interest rates also aided sentiment.

Brent oil futures expiring in May rose 0.2% to $83.67 a barrel, while West Texas Intermediate crude futures for May rose 0.1% to $79.16 a barrel by 20:10 ET (01:10 GMT). The April WTI futures contract crossed $80 a barrel for the first time since early-November. 

Oil gains dulled by US VP Harris calling for Gaza ceasefire 

Oil’s momentum was stalled largely by U.S. Vice President Kamala Harris on Sunday demanding that Hamas immediately accept a six-week ceasefire, while also calling on Israel to offer more aid to Gaza.

Her comments were the strongest yet by a senior U.S. official on the ongoing war, and potentially signaled diplomatic intervention by the country in the long-running conflict. 

Harris’ comments also came just days after President Joe Biden called for a ceasefire during the Muslim holy month of Ramadan. The White House is reportedly working on brokering a ceasefire agreement by as soon as this week.

The Israel-Hamas war, which has caused wider disruptions in the Middle East, has been a key point of support for oil prices, especially on expectations that crude supplies from the oil-rich region will be disrupted by a wider conflict. 

Attacks on vessels in the Red Sea by the Yemeni Houthis, in solidarity with Palestine, had furthered this notion, with the Houthis sinking a vessel for the first time ever last week. 

OPEC+ maintains production cuts

Global oil supplies are still set to tighten later this year, especially as top producers Russia and Saudi Arabia, who lead the Organization of Petroleum Exporting Countries and allies (OPEC+), committed to maintaining their current run of 2.2 million barrels per day supply cuts until the end of June. 

But expectations of tighter supplies have been countered by some fears of weakening demand, especially as the U.S. economy cools and top oil importer China struggles with an economic recovery.

Additionally, record high U.S. production could also plug any potential supply gaps caused by the OPEC+. U.S. inventories grew more than expected in the third week of February, while production remained well above 13 million barrels per day.