Oil extended a slump as US President Donald Trump announced a tentative ceasefire between Iran and Israel.
Global benchmark Brent tumbled almost 5% toward $68 a barrel in early Asian trading, before paring some of that drop. The plunge — which followed a roller-coaster session on Monday that ended in steep losses — took prices to below their level on June 12, the day before Israel attacked Iran. Gold also fell.
In a move that will lower crude’s risk premium, Trump said that Israel and Iran had agreed to a “complete and total ceasefire,” which would begin at about midnight New York time, according to a post on Truth Social.
The global oil market has been rocked by the crisis in the Middle East on concerns that the conflict could disrupt supplies from the region that pumps about a third of the world’s crude. Prices initially spiked, then retraced gains as the standoff unfolded, with Israel, Iran and the US all avoiding hits on oil-related infrastructure and vessel traffic continuing through the Strait of Hormuz with only minor disturbances.
“Traders are now firmly of the belief that the risk of a supply shock is now firmly in the rear-view mirror.” said Chris Weston, head of research at Pepperstone Group Ltd. “The prospect of a prolonged conflict with US involvement has been repriced, giving the green light to add risk, and pare back well-owned tail-risk hedges.”
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