A tense standoff between Israel and Hezbollah has concluded with a brokered ceasefire. The deal, facilitated by the US, France, and Lebanon, marks a significant de-escalation in the volatility in the Middle East.
Israeli Prime Minister Benjamin Netanyahu, under immense pressure from the US, reluctantly agreed to the ceasefire. Reports suggest the US threatened to withhold vital military aid if Israel did not engage in a diplomatic solution.
Despite the incoming pro-Israel Trump administration, Netanyahu opted to avoid further strain on the US relationship, particularly given the Biden administration's support during Israel's recent challenges. It, however, does not seem to be a parting gift for Mr Biden and his team.
The ceasefire is set to take effect at 4:00 AM on Wednesday. However, Israel continued its intense aerial bombardment of Beirut on Tuesday, with over 180 airstrikes reported. This aggressive posture may intensify before the ceasefire really begins.
A notable development during the conflict was the IDF's advance to the Litani River, a border established by a UN-brokered peace agreement. Hezbollah's failure to adhere to the agreement, particularly regarding disarmament and withdrawal from the region, has long been a bone of contention between Israel and the UN.
While Iran played a significant role in the conflict, it was absent from the ceasefire negotiations. The weakening of Hezbollah - and decimation of Hamas - may diminish Iran's influence in Lebanon, potentially forcing Tehran to accept the separation of the Israeli-Hezbollah conflict from the ongoing tensions in Gaza.
The ceasefire has the potential to reduce regional volatility. With the US Navy presence and the incoming Trump administration's pro-Israel stance, Iran may hesitate to retaliate for Israel's recent attacks within its borders.
The de-escalation between Israel and Hezbollah could also alleviate concerns about oil supply disruptions from the Middle East, potentially stabilizing oil prices and reducing insurance premiums for shipping companies.
Meanwhile, as of 18:00 GMT, the prices WTI and Brent were at $68.90 and $72.81espectively. The price of LNG, liquified natural gas, however, has gone up steadily during the last few weeks with the onset of wintry conditions in the northern hemisphere.
Analysts fear the downward price-trend will continue in proportion to the diminishing tension in the Middle East. That means, the OPEC+ will be under further strain when the members meet up online for the next crucial meeting. The anticipated production cuts, in light of new developments, will be highly unrealistic.
