Global energy markets have experienced clear shifts in recent days following the announcement of a ceasefire agreement between Israel and Hamas, which directly impacted oil prices and currency markets, especially the US dollar. Oil prices declined after the ceasefire announcement, with Brent crude priced at $65.91 per barrel. West Texas Intermediate crude recorded $62.17 per barrel, with the decrease attributed to reduced fears of oil supply disruptions in the region. However, concerns remain about US oil stock levels, which could affect price stability going forward.

Ongoing tensions in the Middle East make oil markets more sensitive to any geopolitical changes, potentially causing notable price volatility in the near future.

Despite the drop in oil prices, the US dollar maintained its strength in global markets, supported by continued demand as a primary reserve currency and Federal Reserve policies that bolster currency stability. Meanwhile, some Middle Eastern and Asian countries have begun expanding the use of their local currencies in international trade, which may gradually reduce the dollar’s dominance in global markets.

Tensions in the Middle East directly affect oil-dependent economies, where price drops could reduce government revenues and impact national budgets. Conversely, some countries may benefit from lower oil prices by importing energy at reduced costs, helping to decrease trade deficits and improve trade balances. Forecasts indicate that ongoing regional tensions could push oil prices up again, supporting the US dollar in turn, while increased use of local currencies in trade may reduce dollar demand and affect its value in the long term. Any global economic recovery will increase oil demand, supporting prices and related currencies.

US data showed oil consumption last week rose to 21.990 million barrels per day, the highest level since December 2022, while inventories increased by 3.7 million barrels, exceeding previous estimates of 2.250 million barrels, highlighting strong market demand. Meanwhile, oil prices rose about 3% since the start of the week after OPEC+ announced a production increase of only 137,000 barrels per day for the next month, less than previous expectations amid concerns of market oversupply.

Brent crude futures reached $66.25 per barrel, while US crude futures rose to $62.55 per barrel, marking the highest close since late September. Conversely, momentum for a peace agreement with Kyiv has largely been exhausted, potentially allowing additional Russian oil to flow into global markets later. Russia was the second-largest crude oil producer after the United States last year. Russian Deputy Prime Minister Alexander Novak confirmed that his country is gradually increasing production to approach its OPEC+ quota.

On economic policy, oil prices received support from investor expectations of a Federal Reserve interest rate cut, despite the absence of recent economic data due to the government shutdown. Market instruments indicate a possible 25 basis point rate cut at this month’s Fed meeting, which could boost economic growth and increase oil demand.

These developments reflect how oil and dollar markets are influenced by geopolitical and economic events, with oil remaining volatile and the dollar stable within a narrow range, while ongoing developments in the Middle East and Ukraine remain decisive factors in determining market trajectories in the near term.