Oil prices fell nearly 2% on Monday, erasing Friday’s gains, as peace talks between Israel and Hamas in Cairo alleviated fears of a broader conflict in the Middle East.

The intensification of efforts to mediate a ceasefire between Israel and Hamas was moderating geopolitical tensions and contributed to the weak opening in oil markets this Monday. Markets are also attentive to the upcoming Federal Reserve’s monetary policy review on May 1st.

Brent crude futures were down 1.2% at $87.18 a barrel, while West Texas Intermediate (WTI) futures dropped 1.4% to $87.18 a barrel.

Israel’s Foreign Minister stated on Saturday that a planned incursion into Rafah, where over a million displaced Palestinians are sheltered, could be postponed if an agreement involving the release of Israeli hostages is reached.

A White House spokesperson mentioned that Israel had agreed to listen to the U.S. concerns about the humanitarian impact of a potential invasion.

Nerves are also tense ahead of this week’s meeting of the Federal Open Market Committee, which is expected to take a tougher stance. U.S. inflation rose by 2.7% in the 12 months up to March, according to Friday’s data, above the Federal Reserve’s target of 2%.

Lower inflation would have increased the likelihood of interest rate cuts, which would stimulate economic growth and oil demand.