Oil Prices Decline Sharply

Oil prices settled sharply lower on Tuesday as reports emerged that Hezbollah is seeking a ceasefire with Israel, easing concerns about potential disruptions in oil supplies due to a wider Middle East conflict.

At 2:30 p.m. ET (1830 GMT), West Texas Intermediate crude futures fell 4.6% to settle at $73.57 a barrel, while Brent oil futures decreased 4.3% to $77.44 a barrel.

Hezbollah Ceasefire Call Dents Oil

Hezbollah's deputy leader, Naim Qassem, stated on Tuesday that the group supports the efforts of Lebanon's Speaker of Parliament, Nabih Berri, a Hezbollah ally, in securing a ceasefire with Israel. This potential ceasefire has alleviated fears of a broader conflict disrupting oil supplies in the region.

Israeli Prime Minister Benjamin Netanyahu confirmed that airstrikes had eliminated two successors to Hezbollah’s Hassan Nasrallah, whose potential assassination has fueled escalating tensions.

Lack of New Chinese Measures Weighs

Additionally, crude markets were affected by the absence of new stimulus measures from Chinese authorities as the country resumed activities post-holiday. China expressed confidence in achieving its annual growth targets but did not announce additional fiscal support, disappointing investors hoping for more economic aid.

This disappointment related to the Chinese economic recovery has been a significant factor restraining crude market growth, considering China's status as the largest global importer of crude oil.

Hurricane Milton in Focus

Oil markets are also monitoring Hurricane Milton's potential effects on U.S. oil production as the storm approaches the Gulf of Mexico before making landfall on Florida's west coast this week. Although the hurricane is predicted to bypass key oil infrastructure in the Gulf, several regional ports may impose restrictions that could hinder oil shipments.

API Crude Inventories Due

Later in the session, the latest U.S. crude oil inventory data from the American Petroleum Institute is anticipated, with analysts projecting an increase of 1.9 million barrels for the week ending October 4, according to a preliminary Reuters poll. The official report from the Energy Information Administration is expected to be released on Wednesday.

*(Peter Nurse, Ambar Warrick contributed to this article.)