Oil prices continued to decline today, reaching a two-week low as the market assessed a reduced risk of supply disruptions in the Middle East. However, US President Donald Trump accused both Israel and Iran of breaching a ceasefire he had helped facilitate.
Brent crude futures dropped by $2.56, or 3.6%, settling at $68.92 a barrel by 1201 GMT. Meanwhile, US West Texas Intermediate crude decreased by $2.45, also a 3.6% decline, to $66.06.
Both contracts experienced losses of up to 5% in early trading following Trump’s announcement of a ceasefire agreement between Israel and Iran.
Hours after his announcement, Trump expressed frustration, accusing both nations of breaching the ceasefire, with particular emphasis on Israel.
Israeli Defence Minister Israel Katz stated that he had directed the military to conduct new strikes on targets in Tehran in retaliation for what he termed Iranian missile launches in a “blatant violation” of the ceasefire.
Iran denied any missile attacks.
The ongoing 12-day conflict has caused significant volatility in oil prices, with Brent crude fluctuating within a $10 range on Monday, the widest since July 2022.
In the previous session, both oil contracts ended more than 7% lower after rallying to five-month highs following the US attack on Iran’s nuclear facilities over the weekend.
“Oil prices sharply declined as US strikes on Iranian nuclear sites did not escalate into a wider conflict that could threaten regional supplies,” Barclays noted in a report on Tuesday.
The US’s direct involvement in the conflict has drawn investor attention to the Strait of Hormuz, a narrow passage between Iran and Oman, through which approximately 18 to 19 million barrels per day of crude oil and fuels pass, representing nearly a fifth of global consumption.
“While the geopolitical premium has decreased, tensions between Israel and Iran remain unresolved, and the potential for missteps and renewed escalation persists,” remarked SEB analyst Ole Hvalbye.
