Oil poised for weekly increases following Israel’s rejection of ceasefire proposal.

Oil prices remained stable on Friday, maintaining their trajectory for weekly gains, as tensions lingered in the Middle East following Israel’s rejection of a ceasefire proposal from Hamas.

Brent crude futures edged down by 6 cents, or 0.1%, to $81.57 a barrel by 0728 GMT, while U.S. West Texas Intermediate crude futures increased by 2 cents to $76.24 a barrel.

Both benchmarks surged approximately 3% in the prior session following Israeli forces‘ bombing of the southern border city of Rafah on Thursday, subsequent to Prime Minister Benjamin Netanyahu’s rejection of a proposal to cease the conflict in the Palestinian enclave.

The ongoing tensions have sustained elevated oil prices, with both Brent and WTI poised to gain over 5% for the week.

“The move yesterday seemed a bit excessive on the back of not very much, at least in terms of fundamentals,” said ING’s head of commodities research Warren Patterson.

“I still expect the rangebound trading that we have become accustomed to recently will continue given the comfortable oil balance.”

U.S. officials have intensified their criticism of Israel’s civilian casualties in Gaza, particularly as its offensive shifted focus to Rafah.

A delegation representing Hamas arrived in Cairo on Thursday to engage in ceasefire discussions mediated by Egypt and Qatar.

Although the conflict has bolstered prices, oil production remains unaffected.

The increase in non-OPEC output from Norway and Guyana, along with Russia exporting more crude in February than agreed under the OPEC+ deal, can be attributed to a combination of drone attacks and technical outages at its refineries.

On Friday, a fire erupted at the Ilsky oil refinery in Russia’s southern Krasnodar region. Regional authorities swiftly responded, and the fire was extinguished within one hour, according to a statement from the authorities.

Meanwhile, on Thursday, the U.S. Treasury Department imposed sanctions on three entities located in the United Arab Emirates (UAE) and one tanker registered in Liberia for breaching a cap imposed on the price of Russian oil by a coalition of Western nations.

IG analyst Tony Sycamore noted that deflation risks in China, the world’s leading crude oil importer, are also exerting downward pressure on global oil prices.

“I think the lower crude oil price in Asia is largely due to early weakness in China’s equity markets and the fallout from yesterday’s shocking CPI figure in China which has served to further undermine confidence ahead of the Lunar New Year celebrations,” he added.

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