Oil Prices Fall Sharply As Israel Accepts Ceasefire Deal With Iran

Oil prices fell by 3.5 percent on Tuesday after Israel agreed to a ceasefire proposal from US President Donald Trump, easing fears of further escalation in the 12-day conflict with Iran. The news provided a lift to global equities, with stock markets across Asia and Europe opening higher.

By 08:30 GMT, Brent crude had dropped to $69.00 per barrel, while West Texas Intermediate (WTI) fell to $66.10—both down 3.5 percent from the previous day.

“A potential end to the conflict has been welcomed by market participants,” said Lee Hardman of MUFG, noting that Brent crude has now almost fully reversed all of the gains since the conflict started.

He added that the foreign exchange market was also undergoing a reversal, with the US dollar weakening as geopolitical tensions eased.

“If Middle East risks now fade into the background as a market driver, it is more likely that the US dollar weakening trend will resume,” Hardman said.

Strategic Strait of Hormuz No Longer in Immediate Focus

Markets had been rattled on Monday by fears that Iran might respond to US airstrikes on its nuclear sites by disrupting oil shipments through the Strait of Hormuz, a critical waterway for global energy supplies. However, crude prices plunged by as much as 7 percent after Iran fired missiles at a US military base in Qatar without damaging oil infrastructure.

“Tehran played it cool. Their ‘retaliation’ hit a US base in Qatar — loud enough for headlines, quiet enough not to shake the oil market’s foundations,” said Stephen Innes of SPI Asset Management.

“And once that became clear, the war premium came crashing out of crude.”

Israel Declares Victory, Warns Against Ceasefire Violations

The Israeli government issued a statement declaring that the country had achieved all the objectives of its campaign, citing the removal of an immediate dual existential threat: nuclear and ballistic.

“Israel will respond forcefully to any violation of the ceasefire,” the statement added.

Markets React Globally

In Asia, markets reacted positively to the easing tensions:

• Tokyo’s Nikkei 225 closed up 1.1% at 38,790.56

• Shanghai Composite rose 1.15% to 3,420.57

• Hong Kong’s Hang Seng surged 2.06% to 24,177.07

European markets also opened higher:

• London’s FTSE 100 was up 0.3% at 8,787.24, though gains were limited by falling shares in oil giants Shell and BP

• Paris gained 1.5%

• Frankfurt climbed 1.8%

Elsewhere, Virgin Australia saw a sharp rebound in share value as it re-listed on the local exchange after a four-year absence following near-bankruptcy.

Forex and Interest Rate Outlook

In currency markets:

• Euro/dollar rose to $1.1591 from $1.1581

• Pound/dollar increased to $1.3598 from $1.3526

• Dollar/yen fell to 145.04 from 146.12

• The euro/pound dropped to 85.26 pence from 85.60

The US dollar’s decline followed comments from Federal Reserve Governor Michelle Bowman, who indicated support for a rate cut at the July meeting if inflation remains steady.

Bowman said that ongoing progress in tariff negotiations providing a less risky economic environment to adjust policy could warrant such a move, according to analyst Wan.

Key Market Indicators at 08:30 GMT

• Brent Crude: $69.00 (▼ 3.5%)

• WTI Crude: $66.10 (▼ 3.5%)

• Dow Jones (Previous Close): 42,581.78 (▲ 0.9%)