09:01 AM EDT, 10/09/2025 (MT Newswires) -- Oil prices eased early Thursday after a ceasefire agreement between Israel and Hamas reduced tensions in the Middle East, lowering the geopolitical risk premium on the commodity.

West Texas Intermediate crude oil for November delivery was last seen down US$0.28 to $62.27 per barrel, while December Brent oil was down $0.27 to $65.98.

Reports said Israel is prepared to withdraw its troops from Gaza after Hamas agreed to release the remaining hostages captured during the Oct. 7, 2023, attack that triggered the war, while Israel will free Palestinian prisoners in return. The two sides are expected to sign the U.S.-backed agreement today, though a formal end to the war remains to be negotiated.

The agreement may calm the Middle East and ease concerns the war could spread to the key Persian Gulf region which produces near a third of world oil demand.

"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 ... As of today, the immediate impact on the oil markets will be a slight decrease in the geopolitical risk premium - about 1-2% of the current Brent price - as the markets figure out the details of the peace plan," Rystad Energy's chief economist Claudio Galimberti noted.

Ukrainian attacks on Russian oil infrastructure are keeping a risk premium in place while rising global inventories following the return of some OPEC+ production cuts and higher Western Hemisphere output are boosting inventories and pressuring prices.

"Both WTI and Brent remain range-bound amid expectations of an emerging surplus in the coming months, keeping upside potential limited for now," Saxo Bank wrote.