WTI slumps to near $93.00 as Israel, Lebanon agree to renew ceasefire

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $93.10 during the early European trading hours on Thursday. The WTI price falls as a ceasefire agreement between Israel and Lebanon renewed hopes for diplomatic progress. 

The Guardian reported that Israel and Lebanon on Wednesday agreed to renew a ceasefire but said it would require a "complete cessation" of fire by Iran-backed Hezbollah. The agreement was announced in a joint statement after US-led talks in Washington.

The two sides, which do not have formal diplomatic relations, also agreed to establish a number of “pilot security zones" in which the Lebanese armed forces "will take exclusive control of the territory to the exclusion of all non-state actors.”

However, the uncertainty in the Middle East remains high. Any signs of escalating tension in the region could raise fears of supply disruption and boost the WTI price in the near term. Iran’s Foreign Minister Abbas Araghchi said that while contact with the US has not been cut off, negotiations to end the Middle East war had made "no tangible progress.”

US crude oil inventories continued their downward plunge last week. According to the US Energy Information Administration (EIA) report, crude oil stockpiles in the US for the week ending May 29 fell by 7.974 million barrels, compared to a decline of 3.327 million barrels in the previous week. The market consensus was for 4.0 million barrels.