Oil prices fall amid possible truce between Iran and Israel

Oil prices hit their lowest level in two weeks after Israel agreed to US President Donald Trump’s ceasefire offer with Iran.

This is according to Reuters.

The de-escalation of the conflict has eased fears of disruptions to Middle East oil supplies. Brent crude fell to $68.4 a barrel as of 9:20 a.m. Kyiv time.

Trump announced on Monday that Israel and Iran had fully agreed to a ceasefire, adding that Iran would begin the ceasefire immediately and Israel would begin it in 12 hours. If both sides maintain peace, the war would officially end in 24 hours, ending the 12-day conflict.

“If the ceasefire holds as announced, investors can expect a return to normalcy in the oil market. Going forward, the extent to which Israel and Iran comply with the recently announced ceasefire terms will play a significant role in determining oil prices,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

In contrast, IG analyst Tony Sycamore noted that with the news of the ceasefire, “we are now seeing the risk premium built into the price of crude oil last week virtually disappear.

Of particular concern to the market has been the situation in the Strait of Hormuz. This is a narrow and vital waterway between Iran and Oman, through which 18-19 million barrels of crude oil and fuel pass daily, accounting for almost a fifth of global consumption.

According to analysts, any disruption to maritime traffic through the strait could push prices to $100 a barrel and beyond.

USM previously reported that shipowners and traders are reacting to the escalation of risks in the Strait of Hormuz: freight rates are rising and pressure on the energy market is increasing.