The price of a barrel of US oil fell below $60 on Friday, marking its lowest level in six months, as a ceasefire between Israel and Hamas took effect amid a market suffering from oversupply.

At around 14:40 GMT, the price of the West Texas Intermediate (WTI) crude for November delivery dropped 2.15% to $60.19, after falling to $59.57, its lowest since April.

Brent North Sea crude for December delivery fell 1.96% to $60.19 per barrel.

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

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

Analysts at DNB Carnegie also noted 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 oil transported by sea,” which is “a key indicator of rising onshore inventories in the coming months.”

In just a few months, eight member countries of the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) have raised their oil production quotas by more than 2.5 million barrels per day.

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

Concerns over 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.