Stacy Pereira
- Oil tumbles more than 7% overnight, losing more than $5 a barrel to settle at $68.78/bbl
- Trump announces that Israel and Iran have fully agreed to a ceasefire
- Global markets shrug off fears of escalating Middle East tensions
Oil prices extended their decline, a day after Iran retaliated with a missile strike on a U.S. airbase in Qatar, leaving no reported casualties. Soon after, U.S. President Donald Trump surprised markets by announcing that Israel and Iran had agreed to a complete ceasefire, potentially ending a 12-day conflict, Reuters reported.
Hopes of a truce led to oil prices tumbling to their lowest level in over a week, alleviating concerns about supply disruptions in the region. Brent crude fell to as much as 4% to settle below the $70 per barrel mark at $68.78/bbl. This is the lowest level it has touched since June 11.
Oil Contracts see a 7% decline
Investors were relieved as Iran chose not to disrupt oil and gas tanker traffic through the Strait of Hormuz, but instead attacked the Al Udeid U.S. airbase in Qatar, the largest U.S. military installation in the Middle East. Iran had warned it may close the Strait of Hormuz, a narrow waterway near its southern coast through which about 20% of the world’s oil supply is transported to global refineries.
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As the third-largest oil producer in OPEC, Iran stated that the U.S. strike on its nuclear facilities has broadened the scope of acceptable military targets for its forces. These fears of a full-blown war led to oil prices spiking in the recent past. But both the oil contracts Brent Crude and WTI settled over 7% lower in the previous session after rallying to five-month highs previously.
Global markets at ease
The ‘ceasefire’ talks boosted investor sentiment across markets on Tuesday. In Asia, most indices were trading in the green. Japan’s Nikkei increased by 1.1%, and South Korean stocks reached their highest level since September 2021. Hong Kong’s Hang Seng Index was up 1.76%, whereas India’s Nifty gained 300 points to trade above the 25,000 levels.
As for the U.S. markets, the S&P 500 futures rose by 0.5% and Nasdaq futures went up 0.7%. European stocks are also set for a strong recovery, with EUROSTOXX 50 futures gaining 1.2%
