• Hezbollah and Israel have agreed to a 60-day ceasefire deal that could pave the way for a more permanent peace.
• The conflict, apart from costing thousands of lives and billions of dollars, has added uncertainty to global oil markets, which rely on safe passage through the Strait of Hormuz for a significant volume of trade.
• While tensions in the region are still high, this deal provides an off ramp for Iran and Israel which, if taken, could bring some measure of stability back to the region and to global oil markets.
In what felt like an abrupt about-face, Israel and Hezbollah agreed to a 60-day ceasefire on November 26th, bringing an end to a conflict that has claimed thousands of lives and billions of dollars.1,2 While doubts persist about the durability of the peace deal, Hezbollah appears to have been materially defeated, and Israel appears to want to take the win and shift focus back to Hamas.3
Apart from the tragic human cost, the conflict added significant volatility to global oil markets, as Israel and Hezbollah’s sponsor, Iran, traded blows more than once.4 Iran is a top-10 producer of oil, and the latest round of tit-for-tat attacks between Israel and Iran brought with it the specter of an attack on Iran’s energy infrastructure, a move that could have added a long-term premium to oil prices even apart from the potential retaliatory closure of the Strait of Hormuz.5,6 
Cessation of hostilities between Israel and Hezbollah will hopefully bring with it a calming of tensions between Israel and Iran as well. Iran, which seems to have been searching for an off-ramp, seems to be signaling intentions to take this opportunity as an excuse to de-escalate.7 Benjamin Netanyahu, Prime Minister of Israel, has been less demure, stating that one benefit of the cease-fire would be to allow Israel to “focus on the Iranian threat,” to which Iran’s foreign minister responded, “they can try.”7 
While tensions in the region are still undoubtedly high, the ceasefire deal is a significant step toward a calmer Middle East. Geopolitics have always been a factor in oil markets, but traders may be looking forward to this relatively unpredictable variable taking a back seat to China’s lackluster growth, the US’s impressive production and the Organization of the Petroleum Exporting Countries’ (OPEC) seemingly indefinite supply cuts.9
Important Disclosures & Definitions
1 Boxerman, A., Rasgon, A., Ward, E. & Levenson, M. (November 26, 2024). Israel Approves Cease-Fire with Hezbollah to Halt War in Lebanon. The New York Times.
2 World Bank Group. (November 14, 2024). New World Bank Report Assesses Impact of Conflict on Lebanon’s Economy and Key Sectors. World Bank.
3 Hubbard, B. (November 27, 2024). A Battered and Diminished Hezbollah Accepts a Cease-Fire. The New York Times.
4 Bennett, T. (October 28, 2024). What We Know About Israel’s Attack on Iran. BBC News.
5 US Energy Information Administration (EIA). (April 11, 2024). Frequently Asked Questions (FAQs). EIA.
6 Tejeda, G. (October 9, 2024). The Potential Ripple Effect of Israeli Strikes on Iranian Oil and Global Energy Markets. The Soufan Center.
7 Agencies & TOI Staff. (November 27, 2024). Iran Welcomes Ceasefire in Lebanon, Indicates it May Influence Plans to Strike Israel. The Times of Israel.
8 Ganzeveld, A. (November 12, 2024). The Consequences of the IDF Strikes into Iran. Institute for the Study of War.
9 International Energy Agency (IEA). (2024). Oil Market Report - November 2024. IEA, Paris.
Bear Market: a condition where a market experiences prolonged price declines, usually when securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment.
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AAI000846 12/03/2025
