North Sea Brent crude for December delivery dropped 1.96% to $60.19 a barrel.

US oil prices fell below $60 on Friday, marking the lowest level in six months, as a ceasefire between Israel and Hamas took effect amid a market facing abundant supply.

At around 14:40 GMT, the West Texas Intermediate (WTI) November contract fell 2.15% to $60.19 a barrel, after dipping to $59.57, the lowest since April.

North Sea Brent crude for December delivery also declined 1.96% to $60.19 a barrel.

The Israeli military announced that the ceasefire in the Gaza Strip came into effect on Friday at 09:00 GMT, followed by the release of hostages within 72 hours, as part of an agreement reached with Hamas.

Loqman Otonoga, an analyst at FXTM trading and investment company, told AFP that the oil price drop was due to the agreement “reducing geopolitical risks” and dispelling “concerns about supply disruptions.”

Analysts at DNB Carnegie also pointed out that the decline in crude oil prices reflects “clear signs of the long-awaited supply glut in the oil market,” observed through “a sharp increase in seaborne oil shipments,” which is “a key indicator of rising onshore inventories in the coming months.”

In just a few months, eight OPEC member countries and their allies (OPEC+) have increased their oil production quotas by more than 2.5 million barrels per day.

This situation sharply contrasts with the “largely stable” oil demand, according to the International Energy Agency.

Concerns about an unbalanced market overshadow the war in Ukraine and a new package of sanctions announced by the US government on Thursday targeting about fifty individuals, companies, and ships, mostly in Asia, accused of involvement in selling and transporting Iranian oil and gas.