Oil prices dropped sharply to their lowest levels in over a week on Tuesday after U.S. President Donald Trump announced a ceasefire agreement between Iran and Israel, calming market fears of a potential supply shock from the Middle East — a key oil-producing region.
Brent crude futures fell by $2.08, or 2.9%, to $69.40 per barrel around 03:30 GMT, after plunging more than 4% earlier and hitting their lowest since June 11. Meanwhile, U.S. West Texas Intermediate (WTI) crude declined $2.03, or 3.0%, to $66.48 per barrel, after sliding as much as 6% to its weakest point since June 9 during intraday trading.
President Trump said Monday that Iran had agreed to immediately begin a ceasefire, with Israel set to follow 12 hours later. If both sides hold fire, the war would officially end after 24 hours, marking the conclusion of a 12-day conflict.
“With the ceasefire announcement, markets are pricing out the geopolitical risk premium that drove last week’s rally,” said Tony Sycamore, market analyst at IG. “The risk of supply disruption is now easing.”
Priyanka Sachdeva, senior market analyst at Phillip Nova, noted that investor sentiment could stabilize if the ceasefire holds. “The degree to which Iran and Israel comply with the ceasefire terms will be key in determining the direction of oil prices going forward,” she said.
Iran, a founding member of OPEC and its third-largest oil producer, plays a vital role in global supply. Reduced tensions could facilitate Iranian exports and ease concerns over potential disruptions — a key driver of last week’s price surge.
On Monday, both benchmarks had dropped more than 7% after previously spiking to five-month highs following a U.S. strike on Iranian nuclear sites over the weekend. That escalation had intensified fears of a broader regional war and drew investor attention to the Strait of Hormuz — the strategic chokepoint through which nearly 20% of global oil supply transits daily.
The threat of disruption to maritime traffic through the narrow waterway had raised speculation of crude prices climbing into triple-digit territory. But for now, traders appear to be reassessing those risks.
“Technically, the recent sell-off confirms a resistance band between roughly $78.40 and $80.77,” added Sycamore. “It’s clear that only a major and unexpected disruption to supply could push prices past that ceiling in the near term.”
