Crude oil futures rose Tuesday amid uncertainty about the prospects for a cease-fire in the Israel-Hamas war and as some investors expect OPEC+ will extend its production cuts beyond the first quarter.
The West Texas Intermediate contract for April rose $1.29, or 1.66%, to settle at $78.87 a barrel. Brent April futures rose $1.12, or 1.36%, to settle at $83.65 a barrel.
President Joe Biden told reporters in New York City on Monday that he hoped a cease-fire would be reached in the Israel-Hamas war by March 4.
"My national security advisor tells me that we're close — close but not done yet," Biden said. "My hope is by next Monday we will have a cease-fire."
In a late-night television appearance Monday, the president said, "there's been an agreement by the Israelis that they would not engage in activities during Ramadan as well in order to give us time to get all the hostages out."
But senior Hamas official Ahmed Abdel Hadi told Al Mayadeen, a satellite news channel based in Lebanon, that the U.S. proposal does not meet the militant group's demands for a permanent end to the fighting and a complete Israeli withdrawal from Gaza.
OPEC+ will soon make a decision on whether to extend its production cuts beyond the first quarter. Goldman Sachs expects the reductions to continue through the second quarter with OPEC+ gradually and partially phasing them out in the third quarter, according to research note published Monday.
"There is no chance OPEC and its leader Saudi Arabia will throw in the towel and terminate the production cuts, so the crystal ball is showing continuation of cuts well beyond Q1," Manish Raj, managing director at Velandera Energy Partners, told CNBC.
Raj said the lack of clarity in the Israel-Hamas war and the ongoing turmoil with Houthi militants in Yemen gives traders little reason to sell oil right now.
Houthi militants told Reuters on Tuesday that the group would reconsider its attacks on international shipping the Red Sea only if Israel ends its "aggression" in Gaza.
Maersk North America President Charles van der Steene warned customers Tuesday that they should "be prepared for the Red Sea situation to last into the second half of the year and build longer transit times into your supply chain planning."
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