Oil Prices Drop After Israel-Iran Ceasefire, But Uncertainty Remains

Oil prices dropped by 5% on Tuesday after Israel and Iran agreed to a ceasefire following nearly two weeks of fighting. Brent crude, the global standard for oil prices, fell to just under $67 a barrel, though it later rose slightly in evening trading.

The price had gone up in recent days because people were worried Iran might block the Strait of Hormuz, a key route for transporting oil and gas. That raised fears of a global supply shortage.

Stock markets in the US, UK, and Europe reacted positively after US President Donald Trump posted online, asking Israel not to respond with more bombings. This came after Israel accused Iran of breaking the ceasefire agreement.

Earlier in the day, Trump had announced that the ceasefire was “now in effect,” and Israel later confirmed it had agreed to the deal.

Oil prices had reached as high as $81 a barrel since the conflict began, raising concerns that rising petrol and energy costs would affect living expenses. Now, with crude oil trading at around $67.68, prices are back to where they were before Israel launched missiles on June 13.

Market analyst Priyanka Sachdeva said, “If the ceasefire is followed as announced, investors might expect the return to normalcy in oil.” But she also noted that oil prices will depend on how well both sides stick to the agreement.

Prices went up again slightly after Israel accused Iran of firing another missile, which could signal a break in the truce.

The fighting had pushed global energy prices up, which could have led to higher bills for households and businesses. On Tuesday, UK wholesale gas prices dropped by 17% after rising earlier. Qatar, which sends gas through the Strait of Hormuz, plays a big role in global supply.

On Monday, Iran had fired missiles at a US base in Qatar in response to American attacks on Iranian nuclear sites.

Higher oil prices in recent weeks had sparked fears of rising costs for fuel, food, and travel, similar to what happened after Russia invaded Ukraine three years ago.