Oil prices plummeted to their lowest in over a week on Tuesday as investors reacted swiftly to news that U.S. President Donald Trump had brokered a ceasefire between Israel and Iran. The announcement eased global concerns over potential supply disruptions from the oil-rich Middle East region, pushing both Brent and WTI crude sharply lower in early trading.
Oil markets respond to ceasefire
Brent crude futures dropped by $2.08 or 2.9%, settling at $69.40 per barrel around 0330 GMT, after hitting a low not seen since June 11. U.S. West Texas Intermediate (WTI) crude also saw a significant decline, falling $2.03 or 3.0% to $66.48 a barrel. Earlier in the session, WTI prices had dipped as much as 6% to their weakest level since June 9.
The dramatic decline came after President Trump announced on Monday that Israel and Iran had reached a full ceasefire agreement. According to Trump, Iran would begin adhering to the ceasefire immediately, with Israel following suit 12 hours later. If peace holds for 24 hours, the 12-day conflict would officially end.
Market analyst Priyanka Sachdeva of Phillip Nova noted, “If the ceasefire is followed as announced, investors might expect the return to normalcy in oil.” She added that compliance from both nations would be key in stabilizing prices further.
Geopolitical risk premium fades
Tony Sycamore, an analyst at IG, observed, “With the ceasefire news, we are now seeing a continuation of the risk premium built into crude oil prices last week all but evaporate.”
The earlier price surge had been fueled by fears of an expanding regional war after U.S. airstrikes targeted Iran’s nuclear facilities. This direct involvement had intensified investor focus on the Strait of Hormuz—a critical maritime passage that facilitates the daily transport of nearly 20% of the world’s crude oil and fuel. Any perceived threat to shipping through the strait historically triggers steep increases in oil prices.
Iran, a key OPEC member and the group’s third-largest oil producer, is a significant player in global energy supply. The ceasefire raised hopes that Iran could maintain uninterrupted exports, reducing the likelihood of broader supply constraints.
In the previous trading session, both Brent and WTI crude contracts had surged to five-month highs amid fears of a deeper Israel-Iran conflict. However, those gains were swiftly reversed after the ceasefire announcement.
“Technically, the overnight sell-off reinforces a layer of resistance between approximately $78.40 (October 2024 and June 2025 highs) and $80.77 (the year-to-date high), and it’s clear that it will take something extremely unexpected and detrimental to supply for crude oil to break through this layer of resistance,” Sycamore added.
As the markets recalibrate, traders are closely monitoring the ceasefire’s implementation and its impact on regional stability and energy flows. If the truce holds, oil prices may remain subdued, offering temporary relief to global consumers and producers navigating a volatile geopolitical landscape.
