Oil prices dropped to a two-week low on Tuesday after Israel accepted a ceasefire proposal put forward by former U.S. President Donald Trump, easing fears of potential supply disruptions from the Middle East—one of the world’s key oil-producing regions.
As of 06:45 GMT, Brent crude futures had fallen by $3.82, or 5.3%, trading at $67.66 per barrel. U.S. West Texas Intermediate (WTI) crude also slipped sharply, down $3.75, or 5.5%, to $64.76 per barrel.
The ceasefire deal follows a statement from Israeli Prime Minister Benjamin Netanyahu, who announced that Israel had agreed to Trump’s terms after accomplishing its strategic objective of neutralising what it described as Iran’s nuclear and ballistic missile threat. “Israel has achieved its goal,” Netanyahu said in a statement released by his office on Tuesday.
Trump, who revealed the agreement on Monday, said both sides had committed to ending hostilities. According to him, Iran would begin implementing the ceasefire immediately, while Israel would follow 12 hours later. If the truce holds, the conflict—now in its 12th day—will formally conclude within 24 hours.
“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.
“Moving forward, the extent to which Israel and Iran adhere to the recently announced ceasefire conditions will play a significant role in determining oil prices,” Sachdeva said.
Trump said that a “complete and total” ceasefire will go into force with a view to ending the conflict between the two nations.
“With the ceasefire news we are now seeing a continuation of the risk premium built into crude oil price last week all but evaporate,” said Tony Sycamore, analyst at IG.
Iran, the third-largest crude oil producer within OPEC, stands to benefit significantly from the de-escalation of hostilities, as reduced tensions could pave the way for increased oil exports and minimize the risk of supply disruptions—key factors that have driven market volatility in recent days.
Both Brent and West Texas Intermediate crude contracts ended the previous trading session down more than 7%, reversing course after briefly reaching five-month highs. The earlier surge followed a U.S. airstrike on Iranian nuclear facilities over the weekend, which heightened fears that the Israel-Iran conflict could escalate into a broader regional war.
The United States’ direct military involvement also sharpened investor focus on the Strait of Hormuz, a narrow but strategically critical passage between Iran and Oman. Roughly 18 to 19 million barrels of crude oil and refined products pass through the strait each day, accounting for nearly 20% of global oil consumption.
Worries had been mounting that any disruption to maritime traffic in the Strait could send oil prices soaring—potentially into triple-digit territory. However, with the ceasefire announcement easing geopolitical tension, traders appeared to be pausing for now, taking a step back after the recent dramatic price swings.
“Technically, the overnight sell-off reinforces a layer of resistance between approximately $78.40 (October 2024 and June 2025 highs) and $80.77 (the year-to-date high), and it’s clear that it will take something extremely unexpected and detrimental to supply for crude oil to break through this layer of resistance,” Sycamore added.
