Oil prices dropped sharply on Tuesday, hitting a two week low after Israel accepted a ceasefire proposal put forward by US President Donald Trump to end hostilities with Iran. The development eased fears of supply disruptions in the Middle East, a region crucial to global energy markets.
Brent crude futures fell by 3.82 dollars or 5.3 percent to 67.66 dollars a barrel by 0645 GMT, while US West Texas Intermediate (WTI) crude declined 3.75 dollars or 5.5 percent to 64.76 dollars per barrel. The losses follow a steep fall of over 7 percent in the previous trading session.
Market sentiment shifted as Prime Minister Benjamin Netanyahu confirmed that Israel had achieved its objective of neutralising Tehran’s nuclear and ballistic missile capabilities and would comply with the ceasefire terms.
Under the deal announced by President Trump on Monday, Iran agreed to implement an immediate ceasefire, with Israel to follow 12 hours later. If both sides maintain peace, the 12 day conflict will formally end within 24 hours.
Tony Sycamore, a market analyst at IG, said the news led to the unwinding of the geopolitical risk premium that had inflated oil prices last week. “The ceasefire announcement has effectively erased much of the upward pressure that had been priced into crude markets due to fears of a wider regional war,” he said.
Iran, a key member of OPEC and the bloc’s third largest crude producer, had faced mounting concerns over potential constraints on its exports. The de escalation is expected to restore confidence in uninterrupted supply from the region.
Analysts noted that the ceasefire could help return oil markets to a more stable footing. “If the truce holds, markets may shift back to fundamentals and away from war driven volatility,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
She added that oil traders would remain attentive to any signs of either side breaching the agreement. “The durability of this ceasefire will be pivotal in shaping near term oil price dynamics,” she said.
In recent days, concerns had escalated following the United States’ direct military involvement in the conflict, particularly its strikes on Iranian nuclear sites. Attention quickly turned to the Strait of Hormuz, a strategic maritime chokepoint between Iran and Oman, through which nearly a fifth of global oil supply passes. Disruption in this corridor had raised fears of prices breaching 100 dollars per barrel.
However, with the immediate threat of conflict receding, traders are now reassessing the outlook. “From a technical perspective, the sharp pullback overnight reinforces strong resistance between 78.40 dollars and 80.77 dollars, the highs reached in October 2024 and June 2025,” Sycamore added. “It would require a highly disruptive event to push prices through that range.”
For now, global oil markets appear to be catching their breath after days of dramatic swings as attention turns to whether the fragile peace will hold.
