On Tuesday, oil prices plunged by 3.5 percent following Israel’s public confirmation that it had accepted a ceasefire proposal put forward by US President Donald Trump to end the ongoing conflict with Iran. The announcement came after 12 days of escalating military exchanges that had threatened to disrupt global energy supplies.
Brent crude dropped to $69 per barrel, and US WTI crude fell to $66.10 per barrel early Tuesday. Analysts noted that the market had priced in a “war premium” which has now largely dissipated as the prospect of peace emerged. Lee Hardman from MUFG highlighted that Brent had almost fully reversed gains made since the conflict’s outbreak, while the US dollar also retreated from recent highs.
The ceasefire followed a missile attack by Iran on a US airbase in Qatar, which was intercepted without damage. Stephen Innes of SPI Asset Management described Tehran’s retaliation as significant enough to make headlines but insufficient to unsettle oil markets.
Israel’s government stated it had met all its military goals, including eliminating the immediate nuclear and ballistic threats from Iran, and vowed to respond decisively to any ceasefire breaches. The announcement buoyed stock markets across Asia and Europe, with notable gains in Tokyo, Shanghai, Hong Kong, London, Paris, and Frankfurt. Virgin Australia’s shares also surged as the airline made a comeback in the local market.
In forex markets, the US dollar weakened after Federal Reserve Governor Michelle Bowman expressed openness to cutting interest rates in July if inflation stabilizes, signaling a potential easing of monetary policy.
Despite the ceasefire, missile strikes continued into the early hours, causing casualties in Israel. Both nations have committed to the ceasefire, but the situation remains volatile.