Oil prices slide as Israel accepts ceasefire deal

Global oil prices fell sharply 3.5% on Tuesday after Israel agreed to a ceasefire proposal from U.S. President Donald Trump, signaling a possible end to its conflict with Iran.

The announcement eased fears of a prolonged energy crisis following nearly two weeks of hostilities between the two longtime rivals. Asian markets responded positively, with key indices in Tokyo, Shanghai, and Hong Kong closing higher. European markets also opened on a strong note, with London, Paris, and Frankfurt posting gains.

As of 08:30 GMT, Brent crude had dropped to $69.00 per barrel, while U.S. benchmark West Texas Intermediate (WTI) also fell 3.5%, trading at \$66.10 per barrel.

MUFG analyst Lee Hardman noted that market participants welcomed signs of de-escalation, observing that Brent has almost entirely lost the gains it accumulated during the conflict. He added that the U.S. dollar was also beginning to retreat, signaling that waning Middle East tensions might shift market focus away from safe-haven assets.

Oil prices had surged earlier on Monday amid speculation that Iran could respond to a U.S. strike on its nuclear sites by disrupting oil shipments through the Strait of Hormuz. However, prices plunged by up to 7% when Iran’s retaliatory missile strike on a U.S. base in Qatar caused no damage to energy infrastructure.

Stephen Innes of SPI Asset Management said Iran’s response was more symbolic than strategic, describing the missile strike as “loud enough for headlines, quiet enough not to shake the oil market’s foundations.” As a result, the “war premium” on oil prices quickly evaporated.

The Israeli government declared it had met its key war goals, citing the neutralization of both nuclear and ballistic threats. It warned, however, that any breach of the ceasefire would be met with firm retaliation.

In equities, Tokyo’s Nikkei rose 1.1%, Shanghai gained 1.2%, and Hong Kong’s Hang Seng Index jumped 2.06%. Virgin Australia saw a significant rally on its return to the local stock exchange, marking a dramatic recovery after nearly collapsing over four years ago.

London’s FTSE 100 edged up by 0.7% in early trading, though gains were tempered by declines in oil giants Shell and BP due to the slump in crude prices. Paris and Frankfurt saw stronger momentum, rising 1.5% and 1.8%, respectively.

Currency markets also shifted, with the U.S. dollar slipping after Federal Reserve Governor Michelle Bowman suggested she would support a rate cut at the July meeting if inflation remains stable. Analysts now expect the Fed to resume rate cuts by September.

– Key figures at around 0830 GMT –

Tokyo – Nikkei 225: UP 1.1 percent at 38,790.56 (close)

Hong Kong – Hang Seng Index: UP 2.06 percent at 24,177.07 (close)

Shanghai – Composite: UP 1.15 percent at 3,420.57 (close)

Euro/dollar: UP at $1.1591 from $1.1581 on Monday

Pound/dollar: UP at $1.3598 from $1.3526

Dollar/yen: DOWN at 145.04 yen from 146.12 yen

Euro/pound: DOWN at 85.26 pence from 85.60 pence

West Texas Intermediate: DOWN 3.5 percent at $66.10 per barrel

Brent North Sea Crude: DOWN 3.5 percent at $69.00 per barrel

New York – Dow: UP 0.9 percent at 42,581.78 (close)

London – FTSE 100: UP 0.3 percent at 8,787.24