Global oil prices dropped sharply on Tuesday following the announcement of a U.S.-brokered ceasefire between Israel and Iran, signaling a potential de-escalation in the Middle East that could stabilize energy markets. Brent crude futures fell by nearly 3% to $69.40 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped to $66.48—a decline of more than $2 per barrel for both benchmarks.
The ceasefire, announced by President Donald Trump in the early hours of June 24, brought a wave of optimism to financial markets. Trump declared a “complete and total ceasefire,” adding that Iran agreed to halt hostilities immediately, with Israel set to follow within 12 hours. The agreement was reached with the involvement of Vice President J.D. Vance, Secretary of State Marco Rubio, and special envoy Steve Witkoff.
Following the announcement, traders moved swiftly to adjust positions. Analysts noted that the risk premium previously baked into oil prices due to fears of further conflict had begun to unwind. Tony Sycamore of IG said the small war-risk component “has largely evaporated,” while Phillip Nova’s Priyanka Sachdeva added that a lasting truce would likely shift focus back to traditional supply-demand dynamics.
The ceasefire also eased concerns over potential disruptions to key oil transit points like the Strait of Hormuz, through which nearly a third of global seaborne oil passes. With tensions cooling, the likelihood of shipping interruptions appeared to decline, contributing further to the drop in oil prices.
The economic ripple effect extended beyond crude. Stock markets in Asia and Europe rallied, and risk-sensitive currencies, including the Indian rupee, gained ground against the U.S. dollar. The greenback, in turn, weakened as investors rebalanced their portfolios away from safe-haven assets.
The broader market reaction also reflects expectations that lower oil prices could help moderate inflation, a key concern for the Federal Reserve. Fed Chair Jerome Powell is scheduled to testify before Congress later this week, and the latest developments may influence policymakers’ views on economic stability.
Still, energy analysts cautioned that the situation remains fluid. While no new missile strikes were reported as of Tuesday morning, air raid sirens were heard in parts of southern Israel, suggesting lingering tensions. If the ceasefire collapses or enforcement falters, oil markets could see renewed volatility.
For now, however, the truce has injected a measure of calm into a volatile region—and the oil market is responding accordingly.
