Oil prices drop 6% as Israel-Iran ceasefire reduces Middle East supply risk
Oil prices fell 6% on Tuesday to settle at a two-week low, on expectations the ceasefire between Israel and Iran will reduce the risk of oil supply disruptions in the Middle East.
The ceasefire was on shaky ground with U.S. President Donald Trump accusing both Israel and Iran of violating it just hours after it was announced.
Brent crude futures fell $4.34, or 6.1%, to settle at $67.14 a barrel. U.S. West Texas Intermediate (WTI) crude fell $4.14, or 6.0%, to settle at $64.37.
Settlement was the lowest for Brent since June 10 and WTI since June 5, both before Israel launched a surprise attack on key Iranian military and nuclear facilities on June 13.
"The geopolitical risk premium built up since the first Israeli strike on Iran almost two weeks ago has entirely vanished," said Tamas Varga, a senior analyst at TP ICAP’s PVM Oil Associates brokerage and consulting firm.
On Monday, both oil contracts settled down more than 7%. They had rallied to five-month highs after the U.S. attacked Iran’s nuclear facilities over the weekend.
Direct U.S. involvement in the war had investors worried about the Strait of Hormuz, a narrow waterway between Iran and Oman, through which between 18 million and 19 million barrels per day (bpd) of crude oil and fuels flow, nearly a fifth of global consumption.
Prices also fell as Trump said China, the world’s biggest oil importer, can continue to purchase oil from Iran.
Source : Reuters
