Oil prices declined on Friday, after settling around 1.6% lower in the previous session, as the market’s risk premium faded after Israel and Hamas agreed to the first phase of a plan to end the war in Gaza.

Brent crude futures were down 66 cents, or 1%, at $64.56 a barrel at 1016 GMT. U.S. West Texas Intermediate crude was down 61 cents, or 1%, to $60.90.

“Finally having some kind of peace process in the Middle East is lowering the shoulders a little bit,” said Bjarne Schieldrop, chief commodities analyst at SEB. This could ease fears about crude carriers passing through the Suez Canal and the Red Sea, he said.

BOTH BENCHMARKS ON TRACK FOR WEEKLY GAINS

Israel and the Palestinian militant group Hamas signed a ceasefire agreement on Thursday in the first phase of U.S. President Donald Trump’s initiative to end the war in Gaza.

Under the deal, which Israel’s government ratified on Friday, fighting will cease, Israel will partially withdraw from Gaza, and Hamas will free all remaining hostages it captured in the attack that precipitated the war, in exchange for hundreds of prisoners held by Israel.

Numerous vessels have been attacked by the Iran-aligned Houthis in Yemen since 2023, targeting ships they deem linked to Israel in what they described as solidarity with Palestinians over the war in Gaza.

On a weekly basis, Brent was up around 1% and WTI was relatively flat, so far. Both benchmarks fell steeply last week.

Prices climbed about 1% on Wednesday to a one-week high because of stalled progress on a Ukraine peace deal, a sign that sanctions against Russia, the world’s second-largest oil exporter, could continue.

The Gaza ceasefire deal means the focus can move back to the impending oil surplus, as OPEC proceeds with the unwinding of production cuts, said Daniel Hynes, an analyst at ANZ.

A smaller-than-expected November hike in output agreed by the Organization of the Petroleum Exporting Countries and allies (OPEC+) on Sunday eased some of those oversupply concerns.

“Markets’ expectations for a sharp ramp up in crude supply have not manifested themselves in substantially lower prices,” BMI analysts said in a note on Friday.

“The most recent rise in production is lower than previously feared, contributing to a slight rise in prices for the week,” they said.

Investors are also worried that a prolonged U.S. government shutdown could dampen the American economy and hurt oil demand in the world’s largest crude consumer.

Additional reporting by Sudarshan Varadhan

—Anna Hirtenstein, Reuters

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Didn’t see that coming? You’re likely not alone. A year of tariff tussles capped off with bombs flying in the Middle East probably had most worried about their stock market portfolios.

Yet, despite the chaos, the S&P 500 has continued an epic run since it got oversold in early April following President Trump announcing tougher-than-thought tariffs on global trade partners.

Related: Wall Street veteran analyst who predicted stock market rally resets forecast

The SPDR S&P 500 ETF  (SPY)  has now marched more than 22.6% higher since President Trump paused implementing most reciprocal tariffs on April 9 for 90 days. The tech-heavy Nasdaq Composite has performed even better, rallying 30.4%.

The S&P 500 is now only 1.1% below an all-time high. The Invesco Nasdaq 100 Trust  (QQQ) , which comprises the biggest stocks in the Nasdaq, including Nvidia, is within 0.20% of an all-time high.

I bet you didn’t have that on your bingo card. Especially, last week, when worry mounted that the stock market’s run would falter under the weight of rising geopolitical worry after Israel attacked Iran, prompting daily missile fires between the two countries.

Middle East ceasefire helps send stocks soaring

The potential for the conflict to spread sent oil prices surging, and concerns seemed well founded when the US announced on June 22 it had dropped bunker busters on Iran’s Fordow nuclear facility.

Related: Analyst sends blunt 8-word message ahead of trade deal deadline

Yet, the stock market largely looked beyond the concerns as big money investors made bets that the war would be measured in days not years. 

The S&P 500 retreated just 0.46% last week, while the Nasdaq 100 was essentially flat. On Monday, when markets opened after the US bombing, stocks found their footing, surging on hopes for a ceasefire.

The gains continued on June 24, as investors increasingly became comfortable with tensions deescalating, 

The S&P 500 gained 1.1% on June 24 while the Nasdaq Composite gained 1.4% on the session.

Initially, it appeared that tempers would overcome peace, given Iran and Israel both launched additional missiles after President Trump’s ceasefire announcement.

Those actions sparked a sharp rebuke from President Trump, who laid into both countries before boarding Marine One on the White House lawn.

“I’m not happy with Israel…I’m not happy with Iran… We basically have two countries that have been fighting so long, so hard, that they don’t know what the f— they’re doing,” said Trump.

The two sides seemed to move closer to ceasefire as the day progressed.

On Polymarket, bets suggest currently suggest only a 4% chance that the important Strait of Hormuz, which handles 20% of global oil supply, would close before July. Similarly, Polymarket’s data indicates less than a 1% chance that the US declares war on Iran, and a 6% chance of another US attack on Iran before month’s end.

On June 23, veteran analyst Tom Lee suggested that the risks associated with geopolitical conflict may be priced in, setting the stage for more upside.

Ambarella  (AMBA)  was among the biggest gainers, rising 21% on takeover chatter. Coinbase  (COIN)  rallied 12% in the wake of stablecoin legislation.

Related: Veteran fund manager sends dire message on stocks

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U.S. stock futures signaled anxiety Sunday night as Wall Street weighed the implications of deepening U.S. involvement in the Middle East with its attack on Iran’s nuclear facilities.

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