Oil prices dropped for the third consecutive day on Wednesday due to growing optimism about a ceasefire in the Middle East, as well as an increase in crude inventories and production in the US, the largest oil consumer in the world.

Both benchmarks for oil prices were down by more than 1% at 10:35 GMT. Brent crude futures for July fell by $1.15 to $85.18 per barrel, while US West Texas Intermediate (WTI) crude futures for June dropped by $1.21 to $80.72 per barrel.

The possibility of a ceasefire agreement between Israel and Hamas, with Egypt leading efforts to restart negotiations, contributed to the decline in oil prices.

ANZ analysts mentioned that the chance of a ceasefire has reduced concerns about the conflict escalating and potential disruptions to the oil supply.

Despite this, Israeli Prime Minister Benjamin Netanyahu stated on Tuesday that he would proceed with an attack on the southern Gaza city of Rafah, regardless of Hamas’ response to the latest ceasefire proposals and the return of Israeli hostages.