Oil prices dropped 3.5% on Tuesday after Israel accepted a US-brokered ceasefire proposal with Iran, easing fears of prolonged conflict in the Middle East. Brent crude fell to $69.00 per barrel, while US benchmark WTI declined to $66.10.
The de-escalation comes after nearly two weeks of military exchanges, including a weekend US strike on Iranian nuclear facilities and Iran’s retaliatory missile launch at a US base in Qatar, which caused no disruption to oil infrastructure.
“The potential end to the conflict has been welcomed by market participants,” said Lee Hardman of MUFG, noting Brent had almost fully erased gains made during the crisis.
Analysts say the sharp retreat in oil prices reflects the market pricing out the “war premium.” “Tehran played it cool — loud enough for headlines, quiet enough not to shake the oil market’s foundations,” said Stephen Innes of SPI Asset Management.
Markets rally
Asian and European equities rose on the easing geopolitical risk. Tokyo gained 1.1%, Shanghai added 1.2%, and Hong Kong jumped 2.1%. In Europe, Paris rose 1.5%, Frankfurt 1.8%, and London edged up 0.7%, though oil stocks like Shell and BP slipped on falling crude prices.
Virgin Australia surged as it re-entered the stock market, marking a comeback after near-collapse over four years ago.
Currency and fed signals
In forex, the dollar weakened slightly after Fed Governor Michelle Bowman signaled openness to rate cuts in July if inflation remains steady. The euro rose to $1.1591, and the pound climbed to $1.3598.
Key market snapshot (0830 GMT):
Brent Crude: $69.00 (-3.5%)
WTI Crude: $66.10 (-3.5%)
Tokyo: +1.1%
Shanghai: +1.2%
Hong Kong: +2.06%
London FTSE 100: +0.3%
Dow Jones (Monday close): +0.9% at 42,581.78
Euro/Dollar: $1.1591
Pound/Dollar: $1.3598
Dollar/Yen: ¥145.04
