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(Bloomberg) -- Oil dropped as light pre-holiday trading exacerbated signs of diminishing risks from the conflict in the Middle East.

West Texas Intermediate shed 3.2% to settle below $69 a barrel. The Israeli ambassador to the US said a cease-fire agreement between his country and Lebanon’s Hezbollah could happen “within days.” Brent slid 2.9% to settle near $73.

A cease-fire in Lebanon would reduce the likelihood that the Trump administration will impose hawkish sanctions on Iranian crude in January, said Rob Thummel, senior portfolio manager at Tortoise Capital.

“It’s a supply problem,” Thummel said. “If Iran’s going to keep the supply on the market, then that means you’ve got a fair amount of supply next year potentially coming online.”

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Iran currently supplies about 3.4 million barrels a day as the third-largest OPEC producer. A maximum-pressure campaign from the US against Iran could wipe out 500,000 barrels a day, Rapidan Group President Bob McNally said last week.

Crude is also jumpy ahead of the Thanksgiving holiday and an OPEC+ meeting this weekend, when the cartel will decide whether to add extra barrels to the market. Traders and analysts surveyed by Bloomberg last week anticipate OPEC+ will pause its scheduled January production hike.

The UK government expanded its sanctions against Russia’s energy industry on Monday, offering some price support.

Crude has traded in a range of about $6 a barrel since the middle of October — alternating between weekly gains and losses — as fresh tensions in Russia and Ukraine wrestled with signs of cooling risk in the Middle East. Some indications of improvements in physical markets have countered the prospects of oversupply.

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