Oil prices dropped significantly on Tuesday, hitting their lowest levels in over a week, after US President Donald Trump announced that Iran and Israel had reached a ceasefire agreement. The news alleviated concerns about potential supply disruptions in the Middle East, a crucial region for global oil production. This narrow passage in the Gulf handles nearly 20% of the world’s oil and gas trade.
On Monday, Trump declared that Israel and Iran had reached a full ceasefire agreement, stating that Iran would initiate the truce immediately, with Israel following 12 hours later. If both nations uphold the agreement, the conflict lasting 12 days would officially come to an end after 24 hours of sustained peace.
Brent crude futures dropped by $2.08, or 2.9%, to $69.40 a barrel this morning, after previously falling over 4% and hitting their lowest point since June 11.
US West Texas Intermediate (WTI) crude fell by $2.03, or 3.0%, to $66.48 a barrel, after plunging as much as 6% earlier in the session to its lowest point since June 9.
Oil prices surged earlier this month amid escalating tensions, reaching over $80 per barrel before retreating as hopes for a ceasefire grew.
According to a Reuters report, “If the ceasefire is followed as announced, investors might expect the return to normalcy in oil,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“Moving forward, the extent to which Israel and Iran adhere to the recently announced ceasefire conditions will play a significant role in determining oil prices,” she added.
For now, markets are watching closely to see if both countries follow through, which could either bring stability or lead to renewed uncertainty.
