Israel's military has confirmed that for the first time it is actually pulling troops from southern Gaza instead of adding them. Specifically ground forces are being withdrawn from Khan Younis following months of intense fighting which has destroyed much of the city.
The Israel Defense Forces (IDF) announced Sunday that its 98th division had "concluded its mission" there and that the division is being withdrawn from the Gaza Strip to "recuperate and prepare for future operations."
However, there's no firm indicators that the planned Raffah assault is off, amid ongoing pressure from the Biden administration not to move forward, with the IDF also saying that "a significant force led by the 162nd division and the Nahal brigade continues to operate in the Gaza strip, and will preserve the IDF’s freedom of action and its ability to conduct precise intelligence based operations."
But this withdrawal and lull was enough to see oil prices briefly decline from a five month high, also on hopes that Iran's inaction so far means a massive retaliatory attack in response to last week's Israeli attack on the Damascus embassy might not be coming.
Bloomberg said in a Sunday note that "Brent futures tumbled by as much as 2.6% before clawing back some losses to trade near $90 a barrel"--and on Monday pushing back above $90. West Texas Intermediate briefly fell below $86 on the headlines suggesting cooling of geopolitical tensions in the Middle East, before regaining.
"Oil has rallied recently on escalating tensions in the Middle East and supply shocks, raising the prospect of the global benchmark reaching triple figures," the report said. "Trading of call options that profit from higher prices was the second-busiest on record on Friday."
Israel also appears newly committed to a fresh round of truce talks in Qatar, with the Mossad chief reportedly leading an Israeli delegation back to the talks, after previously quitting with no progress made. As for the troop withdrawal, CNN has observed, "A CNN team along the border where troops enter and leave Gaza has not yet seen large numbers of troops withdraw, but it has seen a large number of tanks pull out of Khan Younis overnight. They are now stationed on the border of Gaza and Israel."
But the price decline is also looking ahead to three greatly anticipated reports on the state of the global oil market due out this week. On Tuesday Energy Information Administration’s Short-Term Energy Outlook is issued, followed by OPEC’s latest Monthly Oil Market Report on Thursday, and then the International Energy Agency’s Oil Market Report set to be issued Friday.
IG analyst Tony Sycamore told Reuters of the start of the week price retreat, "It appears the catalyst is Israel saying it has withdrawn all troops except one brigade from the Southern Gaza strip, likely in response to growing international pressure and to deescalate tensions after it killed senior Iranian commanders in Syria last week."
As for a potential Iranian response to the embassy attack, Israeli commanders are still bracing, with Defense Minister Yoav Gallant having stressed the country is prepared for any scenario.
Following a meeting with senior officers this weekend, Gallant told reporters that "the defense establishment has completed preparations for responses in the event of any scenario that may develop vis-à-vis Iran."
