Oil Prices Dip as Gaza Ceasefire Eases Geopolitical Tensions

11th October 2025

Global energy markets saw a modest pullback this week as news of a Gaza ceasefire reduced the geopolitical risk premium that had supported crude prices for much of the past year.

Oil benchmarks — Brent and West Texas Intermediate (WTI) — each fell between 1 % and 2 % in early trading following the ceasefire announcement, extending a multi-week decline. Brent crude briefly dipped below $70 per barrel, its lowest level since mid-2024, before stabilizing slightly on Friday.

Traders reacted swiftly to the de-escalation in Gaza, unwinding positions that had been built around fears of supply disruptions or a broader regional conflict.

Reuters reported that oil "settled 1.6 % lower" after the ceasefire, as the perceived risk of disruption to Middle Eastern exports faded. Analysts described the move as a classic case of the “war premium” evaporating.

“Much of the price support we saw through the summer was geopolitical, not fundamental,” said Anas Alhajji, an independent energy economist. “Once tensions ease, markets revert to the realities of supply and demand — and those point lower right now.”

With geopolitical risk receding, traders are refocusing on a familiar issue: oversupply.
The U.S. Energy Information Administration (EIA) projects that global oil inventories will rise by 2.6 million barrels per day in Q4 2025, as production growth continues to outpace demand.

Non-OPEC producers such as the U.S., Brazil, and Guyana are expected to lead output gains, while OPEC+ has so far maintained a cautious approach to increasing supply.

According to S&P Global Commodity Insights, OPEC+ will add just 137,000 barrels per day in November, underscoring its reluctance to flood the market despite calls from some members for higher quotas.

Global demand growth remains sluggish amid cooling economic activity in major consumer nations.

Weak industrial output in China and slower transport fuel consumption in Europe and North America have weighed on sentiment. A strong U.S. dollar has also made dollar-denominated commodities more expensive abroad, further dampening demand.

However, analysts note that seasonal heating demand and potential supply disruptions elsewhere including Russia or Iran could provide temporary support.

Energy analysts largely agree that prices are likely to trend lower through the remainder of 2025 and into 2026.

The EIA's latest forecast calls for Brent crude to average around $62 per barrel in Q4 2025, falling toward $52 by late 2026.

Bank of America strategist Michael Hartnett recently warned of a potential slide to $50 per barrel if current supply trends persist and risk premiums continue to fade.

Still, not all observers are bearish. “We’re entering a price corridor rather than a free fall,” said Vandana Hari of Vanda Insights. “OPEC+ still has levers it can pull, and any renewed flare-up in the Middle East could quickly reverse the decline.”

The Gaza ceasefire has temporarily eased global energy tensions, removing a key source of support for oil prices. But the larger narrative remains one of oversupply, uneven demand, and restrained producer behaviour.

Unless a new geopolitical shock emerges, analysts expect oil to drift lower into early 2026 a welcome relief for consumers but a growing challenge for producers already grappling with shrinking margins.