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%CrudeOil prices are retreating as peace talks resume between Israel and the militant group Hamas.

The price of Brent crude oil, the international standard, is down 0.78% and trading at $88.82 U.S. a barrel, while West Texas Intermediate (WTI) crude oil, the American benchmark, is down 0.66% to $83.30 U.S. a barrel.

The drop in oil prices comes as Israeli and Hamas delegations meet in the Egyptian capital of Cairo for talks aimed at securing a permanent ceasefire.

Over the weekend, Israel proposed a phased truce with Hamas militants following more than six months of intense fighting between the two sides in the Gaza strip.

Concerns are now easing that the conflict will balloon into a wider war in the Middle East, hurting global oil supplies in the process.

At the same time, oil prices are moving lower ahead of the next interest rate decision by the U.S. Federal Reserve on May 1.

The American central bank is widely expected to leave interest rates unchanged after economic data showed inflation continuing to rise even as the U.S. economy slows, which is the definition of stagflation.

Oil demand is forecast to weaken alongside economic weakness in the U.S. and other major economies such as China.

On the flipside, Ukraine attacked more Russian oil refineries over the weekend, while also calling on more military aid from the U.S. over worsening conditions on the country’s frontlines.

Attacks on Russian refineries have raised some concerns about tighter oil supplies, although those worries have been overshadowed by the peace talks between Israel and Hamas.