Oil edges higher after 3% dip from Trump tariffs and Israel-Hezbollah ceasefire optimism

Ceasefire agreement between Israel and Hezbollah is expected to be announced today

The ceasefire proposal outlines a truce under which Israel would withdraw its troops from southern Lebanon within days. Nada Atallah / The National

Oil prices edged higher on Tuesday after declining by about 3 per cent the day before as a ceasefire agreement between Israel and Hezbollah grew closer.

Traders were also concerned that US president-elect Donald Trump’s administration could introduce new trade tariffs upon entering office, affecting economic growth and crude demand.

Brent, the benchmark for two thirds of the world's oil, was up 0.36 per cent at $73.27 a barrel at 9.02am UAE time. West Texas Intermediate, the gauge that tracks US crude, was trading 0.35 per cent higher at $69.18 a barrel.

On Monday, Brent closed 2.87 per cent lower at $73.01 a barrel, while WTI settled 3.23 per cent lower at $68.94 a barrel.

Lebanese officials have been notified that a ceasefire agreement to end the conflict between Israel and Hezbollah is set to be announced today, a senior Lebanese official told The National on Monday.

The ceasefire proposal outlines a truce under which Israel would withdraw its troops from southern Lebanon within days, while Beirut posts troops to the border and Hezbollah fighters retreat, enabling thousands of displaced Israelis to return to their homes in the north.

Meanwhile, Mr Trump said he would sign an executive order imposing a 25 per cent tariff on all goods imported into the US from Mexico and Canada.

A Trump-led administration may also tighten global crude supplies by enforcing tighter sanctions on oil-producing countries such as Iran and Venezuela, according to analysts.

Iran was the second-largest source of crude supply growth last year after the US, with production reaching about 3.4 million barrels per day and exports at about 1.5 million bpd.

Last week, Mr Trump nominated Scott Bessent to lead the US Treasury, considered to be the president-elect's most consequential economic pick. Mr Bessent, who founded the macro hedge fund Key Square Group in 2015, served as an economic adviser to Mr Trump during the campaign.

“Market participants see the appointment of Bessent as a steadying influence in Trump’s administration,” Zain Vawda, market analyst at Oanda, said in a research note on Monday. “Bessent’s Wall Street experience reassures them, as they believe he’ll support balanced policies and help tone down some of Trump’s more extreme ideas."