Oil prices have eased sharply since Donald Trump’s surprise ceasefire announcement ended the brief but intense 12-day conflict in the Middle East, reversing a rally that had seen crude push toward recent highs. Traders reacted swiftly to the perceived de-escalation, pulling back from risk premiums that had built up over fears of supply disruption.
Brent crude, which had surged to nearly $90 per barrel during the height of hostilities, fell by more than 4% in the 24 hours following the former president’s declaration. By Tuesday morning, it was trading below $85 for the first time in a week. US benchmark West Texas Intermediate (WTI) followed suit, dipping to just under $81 per barrel.
Market analysts attribute the drop to a rapid unwinding of geopolitical risk pricing. The initial strikes on Iranian nuclear facilities and Tehran’s threats of retaliation had prompted speculation of potential attacks on oil infrastructure, particularly in the Strait of Hormuz—a vital shipping corridor for global crude flows. With those fears now on pause, at least temporarily, traders have returned to fundamentals.
The ceasefire caught many market participants off guard, as no formal diplomatic framework had been established. Trump’s announcement, made without consulting traditional allies or providing concrete terms, has nonetheless prompted a reassessment of the immediate risk landscape.
Oil traders, already grappling with weak global demand forecasts and signs of slowing growth in China and Europe, now appear more focused on inventory levels and central bank policy than on Middle Eastern flashpoints. “It’s back to supply and demand, at least for now,” said a senior commodities strategist at a major European bank.
Adding to the downward pressure, the US Energy Information Administration reported an unexpected build in domestic crude inventories, reinforcing concerns that demand may not justify recent price levels. OPEC+, which had previously expressed caution over production increases, has so far remained silent on how the ceasefire might affect its policy stance.
Despite the decline, some observers warn that the calm may be temporary. The underlying tensions in the region remain unresolved, and any misstep or renewed violence could rapidly reignite volatility in the oil market. Energy firms have also kept security protocols in place, wary of the possibility that Iranian-aligned militias or rogue actors might defy the current pause.
Meanwhile, oil-dependent currencies such as the Russian rouble and Canadian dollar softened slightly, reflecting the price shifts. Equity markets welcomed the easing of crude costs, with airline and shipping stocks posting modest gains across Asia and Europe.
As the week unfolds, attention will turn to US Federal Reserve signals and Chinese economic data for further direction. But for now, the heat has been taken out of the oil markets—thanks not to a resolution, but to a fragile and possibly fleeting political gesture.
REFH – newshub finance
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