Oil prices compound losses as traders weigh Trump’s Gaza peace plan

Oil prices pulled lower on Tuesday, compounding losses from the day before as traders continue to fret about the potential of oversupply, as well as new developments in the Israel-Gaza conflict.

Opec+ is considering raising output by at least the 137,000 barrel-a-day hike scheduled for next month, according to a Bloomberg report on Monday which cited sources familiar with the plans.

Brent crude futures (BZ=F) dipped around 1%, to $66.44 a barrel. Last week, crude futures had advanced more than 3%. West Texas Intermediate (CL=F) fell nearly 1.5% to trade at $62.80.

Traders also watched as president Donald Trump attempted to broker a peace deal to stop Israel’s offensive against Hamas in Gaza. Trump put forward a 20-point plan, including an end to fighting; the return of Israeli hostages; and an international “Board of Peace” to help run the territory. Hamas is yet to agree to the deal, which has Israeli prime minister Benjamin Netanyahu’s seal of approval.

Gold pulled back from its record highs on Tuesday, even as uncertainty around the status of a potential government shutdown in the US continues. Investors have been piling into haven metals in recent weeks, but have paused to take profit.

President Trump met with Democrats in the Oval Office on Monday, but both sides left the talks indicating they had made no progress on striking a deal that would avert a government shutdown. Lawmakers have until Wednesday at 12:01am ET to reach an agreement or else a partial government shutdown is set to begin.

“I think we’re headed to a shutdown,” vice president JD Vance said after the meeting.

If a stoppage does occur, in addition to mass firings and chaos airports, the government will cease publishing economic data at a time when the Federal Reserve and Wall Street have a particular need for it. The Department of Labor said its Bureau of Labor Statistics (BLS) would “completely cease operations” during a stoppage, with just one of 2,055 full-time employees continuing to work.

Wall Street and the Fed are anxious to receive Friday’s release of the September jobs report as scheduled. A slew of mixed economic data has shaken confidence in the Fed’s expectation of two more rate cuts this year as a sure thing, especially as apparent divisions emerge among policymakers.

Gold (GC=F) futures contracts dipped 0.5% by late-morning in London to trade around $3,835 per troy ounce. Spot gold also fell 0.4% to $3,810 per ounce.

Sterling gained slightly against the dollar on Tuesday as uncertainty on both sides of the Atlantic gave traders reason to pause.

The dollar index (DX-Y.NYB), which tracks the greenback against a basket of currencies, dipped 0.1%, as the market weighs the possibilities of a government shutdown as soon as tomorrow.

Trump also upped the ante on tariffs for Canada on Monday night as negotiations continue with key trading partners. Levies of 10% on softwood timber and lumber alongside a 25% tariff on “certain upholstered wooden products” are due to take effect on 14 October, according to the White House.

It was the latest blow to the furniture industry after Trump posted on Truth Social about a flurry of tariffs on kitchen cabinets, vanities and other upholstered products last week, to take effect on 1 October.

In the UK, politics is the order of the day, with prime minister Keir Starmer due to address the Labour Party conference at 2pm. There are unlikely to be many new economic easter eggs ahead of chancellor Rachel Reeves’ budget due on 26 November, but the leader has faced increasing scrutiny in recent months amid some key resignations in his top team.

The pound is trading at around the $1.344 mark.

It also fell slightly against the euro (GBPEUR=X) to trade around 1.144.

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