Israel and Hezbollah have agreed to a ceasefire that will begin on Friday at 4 p.m. local time, Reuters reported.

ISRAEL, HEZBOLLAH AGREE TO CEASEFIRE STARTING ON FRI: RTRS

ISRAEL, HEZBOLLAH AGREE ON CEASEFIRE FROM 4PM LOCAL: REUTERS

WTI futures tumbled on the ceasefire headline, falling from about $76.40 a barrel to $75.56, as traders priced in reduced geopolitical risk.

The earlier escalation between Israel and Hezbollah increasingly looks as if both sides were squeezing in last-minute strikes ahead of the ceasefire set to take effect later today.

The ceasefire - if it holds - now sets up for nuclear talks between US and Iran. 

Opening Round Of US-Iran Nuclear Talks Postponed After Israel-Lebanon Clashes Erupt 

Talks between Iran and the US were postponed on Friday in Switzerland, delaying what was supposed to be the opening round of negotiations towards a permanent peace and nuclear deal.

The delay appears to center on a new escalation between Israel and Iran-backed Hezbollah militants in southern Lebanon, a troubling development that threatens the fresh interim deal signed by President Trump and Iran just days ago. Tehran has insisted that a ceasefire in Lebanon is part of the interim deal, meaning the Israel-Hezbollah front could derail the US-Iran diplomatic path to a sustained reopening of the Strait of Hormuz.

The Financial Times provided more details on the overnight development:

Talks between Iran and the US in Switzerland were postponed due to Israel launching a wave of deadly air strikes on southern Lebanon, according to three people familiar with the matter.

Iran did not send a delegation to Switzerland for the nuclear talks because of the attacks, the people said. The interim agreement signed by the US and Iran on Wednesday stipulates the "immediate and permanent termination" of fighting, including in Lebanon.