Oil prices plummeted by 3.5 percent on Tuesday after Israel announced its acceptance of a bilateral ceasefire proposal brokered by U.S. President Donald Trump, signaling a potential end to nearly two weeks of conflict with Iran.
At around 08:30 GMT, Brent crude fell to $69.00 per barrel, while U.S. benchmark West Texas Intermediate (WTI) dropped to $66.10 per barrel, as energy market fears began to ease following the 12-day confrontation.
Market analysts noted a sharp reversal in the oil price rally triggered by geopolitical tensions in the Middle East. “A potential end to the conflict has been welcomed by market participants,” said Lee Hardman of MUFG, noting that Brent has nearly erased the war-induced gains. The U.S. dollar also weakened amid the reduced geopolitical risk.
Oil prices had briefly surged earlier in the week amid concerns that Iranian retaliation to U.S. strikes on nuclear sites could disrupt crude shipments through the Strait of Hormuz. However, prices dropped steeply after Iran launched a limited missile strike on a U.S. base in Qatar, leaving key oil infrastructure unaffected.
“Tehran played it cool. Their ‘retaliation’ hit a U.S. base in Qatar—loud enough for headlines, quiet enough not to shake the oil market’s foundations,” observed Stephen Innes of SPI Asset Management. “Once that became clear, the war premium came crashing out of crude.”
In its statement, Israel declared that it had “achieved all the objectives” in its military campaign, claiming it had eliminated the “immediate dual existential threat: nuclear and ballistic.” It warned, however, that it would respond forcefully to any violation of the ceasefire.
Global financial markets reacted positively. In Asia, Tokyo’s Nikkei 225 rose 1.1 percent, Shanghai closed 1.15 percent higher, and Hong Kong’s Hang Seng Index jumped 2.06 percent. European markets opened higher as well, with Frankfurt up 1.8 percent, Paris up 1.5 percent, and London’s FTSE 100 gaining 0.3 percent, although oil majors Shell and BP posted losses due to the price dip.
In currency markets, the dollar weakened after U.S. Federal Reserve Governor Michelle Bowman signaled a possible rate cut in July, provided inflation remains stable. The market now anticipates the Fed may resume rate cuts by September.
Key market figures as of 08:30 GMT:
- Brent Crude: $69.00 (-3.5%)
- WTI Crude: $66.10 (-3.5%)
- Nikkei 225 (Tokyo): +1.1% at 38,790.56
- Hang Seng (Hong Kong): +2.06% at 24,177.07
- Shanghai Composite: +1.15% at 3,420.57
- FTSE 100 (London): +0.3% at 8,787.24
- Dow Jones (New York): +0.9% at 42,581.78
- Euro/Dollar: $1.1591
- Pound/Dollar: $1.3598
- Dollar/Yen: ¥145.04
