Oil Prices Plunge After Middle East Ceasefire

Crude oil prices dropped sharply on Tuesday, reaching a two-week low after a ceasefire agreement brokered by U.S. President Donald Trump between Israel and Iran eased fears of supply disruptions in the region.

Brent crude declined by 3.5% to $69 per barrel, while U.S. West Texas Intermediate also fell 3.5%, to $66.14. Earlier in the day, both contracts had plummeted by as much as 5%.

“Oil prices fell sharply, as U.S. strikes on Iranian nuclear facilities failed to trigger a wider conflict that could pose a threat to regional supplies,” Barclays noted in a briefing.

Despite the ceasefire, tensions remain. Israeli Defence Minister Israel Katz said the military had been ordered to retaliate against Tehran following alleged violations.

The geopolitical risk premium that had driven oil prices to five-month highs has now eased, but analysts caution that the risk of renewed escalation remains high.

“However the  geopolitical premium has deflated, but tensions between Israel and Iran remain unresolved, the risk of missteps and renewed escalation still lingers.” Analysts said.