Michelle ThompsonOil prices dropped by 5% on Tuesday after Israel agreed to a ceasefire with Iran following nearly two weeks of conflict.
By the end of the day, Brent crude—the global benchmark for oil—fell below $67 a barrel, although it regained some value during later trading.
Prices had surged recently amid fears that Tehran might disrupt global oil supplies by blocking the Strait of Hormuz, a critical shipping passage for oil and gas.
Stock markets in the US, UK, and Europe rose and remained steady after US President Donald Trump urged Israel on social media to refrain from bombing, following accusations that Iran had violated the ceasefire. Earlier, Trump declared that the ceasefire was “now in effect,” which Israel confirmed by agreeing to the terms.
Since the missile strikes began, oil prices had climbed as high as $81 a barrel, raising concerns over potential increases in the cost of living due to higher fuel and business expenses.
Currently, crude is trading at $67.68, which is lower than the price when Israel launched missile attacks on Iran’s nuclear sites on June 13.
Priyanka Sachdeva, senior market analyst at Phillip Nova, noted, “If the ceasefire holds as announced, investors might expect oil markets to return to normal.”
However, she added that “the degree to which Israel and Iran stick to the ceasefire conditions will significantly influence oil prices.”
The price decline slowed after Israel accused Iran of breaching the ceasefire by launching a missile strike.
US stock markets closed higher, with the S&P 500, Dow Jones Industrial Average, and Nasdaq each gaining over 1%.
In Europe, the UK’s FTSE 100 ended flat, while Germany’s DAX rose by 1.6%. Japan’s Nikkei index in Asia closed up 1.1%.
The conflict in the Middle East had driven energy prices up globally, which, if persistent, could increase energy bills and fuel costs.
UK wholesale gas prices fell 17% on Tuesday after an earlier spike. Qatar, a major supplier of liquefied natural gas transported via the Strait of Hormuz, plays a key role in these dynamics.
On Monday, Iran retaliated for US strikes on its nuclear sites by launching missiles at a US military base in Qatar.
The recent oil price hikes sparked fears that rising energy costs could push up prices of petrol, food, and travel worldwide, including in the UK.
Similar effects occurred after Russia invaded Ukraine three years ago, impacting people globally.
