New Delhi: The White House-backed peace plan to end the Israel-Gaza conflict, which has received broad international support, could marginally ease oil market tensions, with a 1–2 per cent drop in Brent crude prices as geopolitical risk moderates, according to Rystad Energy.
The proposed plan includes a ceasefire, hostage-for-prisoner exchange, phased Israeli withdrawal, and the disarming of Hamas — key measures aimed at ending months of hostilities in the region.
The prolonged conflict had intensified regional instability, culminating in the first direct military confrontation between Iran and Israel in April 2024, when both countries exchanged missile strikes. The event marked an unprecedented escalation and contributed to a surge in oil’s geopolitical risk premium through 2024 and early 2025.
Commenting on the development, Claudio Galimberti, Chief Economist at Rystad Energy, said the peace deal could have far-reaching consequences for energy markets.
“The peace agreement is a major breakthrough in recent Middle Eastern history – its implications for oil markets could be wide-ranging, from the possibility of a decrease in the Houthis’ attacks in the Red Sea to an increase in the likelihood of a nuclear deal with Iran and, eventually, the possibility for Iran to increase its crude and product exports,” Galimberti said.
He, however, cautioned against overestimating the immediate impact. “The devil is always in the details, and I would avoid speculating right now due to the many false starts that we have witnessed in the past. As of today, the immediate impact on the oil markets will be a slight decrease in the geopolitical risk premium – about 1-2 per cent of the current Brent price – as the markets figure out the details of the peace plan,” he added.
Rystad noted that the long-term market effect would depend on the credibility and durability of the peace agreement. “In the longer term, if the plan for stable peace proves credible, its impact on prices could be more structural and profound,” Galimberti said.
He also pointed out that global geopolitical pressures will persist, citing the continuing war in Ukraine as a key factor. “As long as the war in Ukraine continues, the geopolitical risk premium is destined to remain elevated, as Russia’s oil production at risk remains high, and Russia is the world’s second-largest oil exporter,” he said.
According to Rystad, while any immediate decline in Brent prices may be limited, a credible peace settlement in the Middle East could restore trade flows, reduce supply disruptions, and stabilise global energy markets over time.
