OIL FUTURES: Crude slides as Israel-Hezbollah cease-fire deal offsets Trump tariff concerns

Crude oil futures settled lower Nov. 26 as geopolitical risk premiums eased amid reports of a cease-fire between Israeli and Hezbollah forces.

NYMEX January WTI settled down 17 cents at $68.77/b, and ICE January Brent dipped 20 cents to end the session at $72.81/b.

Israel and Hezbollah have accepted a US-brokered cease-fire, US President Joe Biden said in a speech Nov. 26 at the White House.

Oil futures had settled down around 3% Nov. 25 amid reports that a potential deal was close and again turned negative late in the Nov. 26 session after Israeli Prime Minister Benjamin Netanyahu said he agreed to a cease-fire deal.

NYMEX December RBOB settled 87 points lower at $1.9918/gal, while December ULSD climbed 51 points to $2.2404/gal.

But despite settling lower on the day, crude prices remained well supported after US President-elect Donald Trump has said he will impose new tariffs on imported goods from China, Canada and Mexico.

The proposed 25% tariff on imports from Canada and Mexico would drive costs higher for US refiners, which depend on heavy and medium crudes from both countries and would likely pass those costs on to consumers via higher refined products prices, sources said Nov. 26.

"It is not clear at this point if crude will be included or excluded from these potential tariffs," Manav Gupta, analyst with UBS, wrote in a research note. "In our opinion, if crude is included, it will drive higher prices for refined products leading to wider inflation which the president-elect has vowed to bring down."

Meanwhile, representatives from Iraq, Saudi Arabia and Russia discussed oil markets in Baghdad on Nov. 26, ahead of a key OPEC+ meeting, where ministers will discuss oil policy for 2025. Oil prices briefly spiked in midday New York trading following media reports stating the group was mulling a delay to a planned output hike due to take place in January.

The full OPEC+ group is set to hold a ministerial meeting scheduled for Dec. 1 online, rather than in person in Vienna, sources within the group said Nov. 25.

OPEC+ has already twice delayed easing voluntary production cuts totaling 2.2 million b/d due to market conditions.

S&P Global Commodity Insights analysts see the delays as indicative that prices in the $60-$75/b range are not high enough for OPEC+ to increase production.

"If prices go above $80/b, that would increase the chances of a production increase, which could make the $80/b range a de facto price ceiling for a time," they said in a recent report.