Oil rises after Israeli strikes on Rafah and the continuation of truce talks

Oil prices climbed on Tuesday following reports of Israeli airstrikes on the Gaza city of Rafah, with ceasefire negotiations ongoing but no agreement reached yet with Hamas.

By 0400 GMT, Brent crude futures rose by 23 cents, or 0.28 percent, reaching $83.56 per barrel. Similarly, US West Texas Intermediate crude futures increased by 24 cents, or 0.31 percent, reaching $78.72 per barrel.

Market participants are closely watching for updates on US crude inventories, with new data expected soon.

A preliminary Reuters poll on Monday suggested expectations of a decline in US crude oil and product inventories for the previous week. Analysts estimated an average decrease of about 1.2 million barrels for crude inventories in the week ending May 3.

Oil prices saw an uptick at settlement on Monday, somewhat offsetting losses from the previous week. Both Brent and WTI contracts experienced their largest weekly losses in three months, influenced by weak US jobs data and speculation about the timing of a potential US interest rate cut.

Despite a ceasefire proposal from Egypt and Qatar accepted by Hamas on Monday, Israel proceeded with airstrikes on Rafah, rejecting the proposal as not meeting its demands. The conflict in Gaza has been ongoing for seven months, with no resolution announced yet.

Saudi Arabia’s decision to increase official selling prices for its crude sold to Asia, northwest Europe, and the Mediterranean region in June also contributed to supporting oil prices, indicating expectations of robust demand during the summer.

However, gains in oil futures were limited by a stronger dollar, which makes crude more expensive for holders of other currencies. The dollar index, measuring the US currency against six major currencies, rose to 105.18 points by 0400 GMT.