Oil prices tumbled by nearly 5% on Tuesday after Israel agreed to a ceasefire with Iran after nearly two weeks of conflict. Brent crude, the international benchmark for oil prices, fell to $68 a barrel, which is below the level it was at when Israel launched missiles against Iran's nuclear sites on 13 June. Prices had spiked in recent days as concerns grew that Iran could disrupt global supplies by blockadingthe Strait of Hormuz, a key shipping route for oil and gas. Stock markets in Asia rose as US President Donald Trump declared the ceasefire "is now in effect", after which Israel confirmed that it had agreed to the move. Oil prices have soared to as much as $81 a barrel since the missile strikes began, stoking fears that the cost of living could increase as petrol, diesel and business expenses grew. "If the ceasefire is followed as announced, investors might expect the return to normalcy in oil," said Priyanka Sachdeva, senior market analyst at Phillip Nova. But she added that "the extent to which Israel and Iran adhere to the recently announced ceasefire conditions will play a significant role in determining oil prices". Japan's Nikkei share index rose by 1.1% while Hong Kong's Hang Seng increased by 2.1%.
Oil prices drop as Israel agrees to ceasefire with Iran
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"Oil Prices Fall Nearly 5% Following Israel-Iran Ceasefire Agreement"
Bbc News
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TruthLens AI Summary
On Tuesday, oil prices experienced a significant drop of nearly 5% following Israel's announcement of a ceasefire with Iran, bringing an end to nearly two weeks of escalating conflict. Brent crude, which serves as the international benchmark for oil prices, fell to $68 a barrel, a notable decrease from the prices recorded prior to Israel's missile strikes against Iran's nuclear facilities on June 13. The conflict had previously led to a surge in oil prices, which reached as high as $81 a barrel, driven by fears that Iran might retaliate by blocking the Strait of Hormuz, a crucial passage for global oil and gas shipments. As news of the ceasefire spread, stock markets in Asia responded positively; the Nikkei share index in Japan rose by 1.1%, and Hong Kong's Hang Seng index climbed by 2.1%. This market reaction reflects a broader sentiment of relief among investors regarding the potential stabilization of oil supply chains.
Market analysts, such as Priyanka Sachdeva from Phillip Nova, noted that while the ceasefire could signal a return to normalcy in oil prices, the future trajectory will largely depend on how well both Israel and Iran adhere to the ceasefire terms. Investors remain cautious, recognizing that any deviation from the agreement could reignite tensions and lead to further disruptions in oil supply. The initial spike in oil prices during the conflict had raised concerns about the impact on the cost of living, particularly for petrol and diesel, as well as business costs. The market's current optimism hinges on the hope that a sustained ceasefire will prevent further escalation and allow for a more stable oil pricing environment in the coming weeks.
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