Oil prices fell sharply on Tuesday, reaching their lowest levels in over a week after U.S. President Donald Trump announced ceasefire between Iran and Israel, signaling a potential easing of regional tensions.
As of 0006 GMT, Brent crude futures dropped by $2.69 or 3.76%, settling at $68.79 per barrel. Earlier in the session, Brent had fallen over 4%, hitting its lowest price since June 11.
Similarly, U.S. West Texas Intermediate (WTI) crude fell by $2.70 or 3.94% to $65.46 per barrel, after an earlier drop of nearly 6%, marking its weakest level since June 9.
The sharp decline came after President Trump announced late Monday that both Iran and Israel had agreed to a comprehensive ceasefire to end the 12-day conflict. According to Trump, Iran would begin the truce immediately, with Israel to follow 12 hours later. If the agreement holds, the war will officially conclude within 24 hours.
In a post on his social media platform Truth Social, Trump wrote, “CONGRATULATIONS TO EVERYONE! A full and complete CEASEFIRE has been agreed upon by both Israel and Iran, to begin in approximately six hours after the completion of current operations. The ceasefire will last for 12 hours, after which the war will officially be over!”
“The ceasefire between Iran and Israel has removed much of the risk premium that had been built into oil prices over the past week,” said Tony Sycamore, analyst at IG.
It is pertinent to note that Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), is a key player in the global oil supply chain. The easing of hostilities raises the possibility of increased Iranian oil exports, reducing market fears of a supply disruption.
Recently oil prices had surged to five-month highs due to the escalating conflict, particularly after the U.S. conducted airstrikes on Iranian nuclear facilities, fueling concerns of a wider regional war. The truce announcement appears to have reversed that trend, calming oil markets for now.
