Ceasefire Agreement Between Israel and Hezbollah Announced by President Biden

Editor's note: This story has been updated to include additional details in the introduction and now reflects the approval of a cease-fire agreement by Israel's cabinet, along with the announcement made by U.S. President Joe Biden on Tuesday.

On Tuesday, President Joe Biden announced that both Israel and Lebanon have agreed to a cease-fire deal. In remarks delivered from the White House Rose Garden, he stated, "Today I have some good news to report from the Middle East." He confirmed that he had spoken with the prime ministers of both nations.

Biden expressed satisfaction, saying, "I am pleased to announce that their governments have accepted the U.S. proposal to end the devastating conflict between Israel and Hezbollah." The cease-fire is scheduled to take effect at 4 a.m. on Wednesday, as Biden noted.

Hezbollah has yet to publicly respond to this announcement, according to reports from the New York Times. Furthermore, it is important to note that the Lebanese government does not have control over the militant group Hezbollah.

The cease-fire agreement will last for 60 days and will involve oversight from the U.S., the United Nations, and other parties. This deal stipulates that Israeli forces will withdraw from Lebanon, while Hezbollah will relocate its fighters to a designated area north of the Litani River.

Despite the ongoing negotiations for a cease-fire, tensions remain high, with strikes occurring between Israel and Hezbollah.

Details of the Proposal

The cease-fire is intended as a short-term halt to hostilities for 60 days but aims for a longer-lasting resolution, said an Israeli official to CNN. Prime Minister Benjamin Netanyahu highlighted three key reasons for pursuing the cease-fire: it will allow a shift of focus to Iran, provide an opportunity to replenish Israeli troops, and increase pressure on Hamas to release hostages taken on October 7, 2023.

Concerns About the Ceasefire

However, there are skepticism and concerns regarding the effectiveness of the cease-fire. Israel’s national security minister Itamar Ben-Gvir has emphasized the necessity for a "security zone" inside Lebanon to protect against potential threats from Hezbollah. He warned that without such measures, there could be another conflict in the future.

Ben-Gvir did not make any indication that he would withdraw from Netanyahu's coalition as a result of this cease-fire agreement.

Market Reactions

In financial markets, oil prices experienced a decline on Tuesday, with the United States Oil Fund (USO) trading 0.65% lower during the session. Israeli stocks, tracked via the VanEck Israel ETF (ISRA), have shown positive performance, increasing by 23.5% year-to-date.

Other oil-related exchange-traded funds (ETFs) were also down during trading hours. The ProShares Ultra Bloomberg Crude Oil (UCO) dropped 0.93%, while the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) also fell by 0.75% as the market approached closing. The MicroSectorsTM Oil & Gas Exploration & Production 3X Leveraged ETNs (OILU) recorded a decrease of 0.45%, according to Benzinga Pro.

This situation in the Middle East warrants close attention due to its potential impacts on regional stability and global oil prices.

Israel, Hezbollah, Ceasefire