Oil prices experienced a sharp decline on Tuesday after Israel announced its acceptance of a bilateral ceasefire proposal put forward by US President Donald Trump, signaling a potential end to 12 days of intense conflict with Iran. The announcement brought immediate relief to global energy markets, which had been rattled by fears of supply disruptions.
At approximately 08:30 GMT, Brent crude had dropped 3.5 percent to $69.00 per barrel, while the US benchmark, West Texas Intermediate (WTI), also fell 3.5 percent to $66.10 per barrel. Market analysts noted that these losses nearly erased all the gains made since the hostilities began.
The ceasefire news was met with optimism in Asian markets, where shares climbed as the threat of an energy shock receded. European markets followed suit, with London, Paris, and Frankfurt posting gains at the open. According to Lee Hardman of MUFG, “A potential end to the conflict has been welcomed by market participants,” highlighting that Brent crude “has now almost fully reversed all of the gains since the conflict started.” He further observed, “In the FX market a similar reversal is underway with the US dollar giving back recent gains. 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.”
Okay.ng reports that the ceasefire agreement, brokered by President Trump, stipulates that Iran would begin the truce immediately, with Israel following after a 12-hour period. If both sides adhere to the terms, the conflict will officially conclude after 24 hours, marking an end to nearly two weeks of hostilities.
Earlier, crude prices had surged amid speculation that Iran might retaliate against a US strike on its nuclear facilities by threatening oil shipments through the strategic Strait of Hormuz. However, the market reversed sharply—falling as much as seven percent—after Iran launched missiles at a major US base in Qatar, leaving oilfield infrastructure unharmed.
The Israeli government stated on Tuesday that it had “achieved all the objectives” in its confrontation with Iran, claiming to have eliminated “an immediate dual existential threat: nuclear and ballistic.” The statement added, “Israel will respond forcefully to any violation of the ceasefire.”
Elsewhere, the dollar weakened as risk appetite returned to global markets, with the Australian and New Zealand dollars strengthening and major stock indices in Tokyo, Hong Kong, and Shanghai closing higher. In Europe, London’s FTSE 100 gained 0.3 percent, Paris rose by 1.5 percent, and Frankfurt jumped 1.8 percent at the open.
Federal Reserve Governor Michelle Bowman also signaled support for a potential interest rate cut at the July meeting if inflation remains steady, further contributing to the dollar’s decline.
Market participants now await further details on the ceasefire’s implementation and its impact on longer-term peace prospects in the region.
