Oil prices fell sharply for a second consecutive day on Tuesday, retreating to levels not seen since early June, as markets reacted to the ceasefire between Israel and Iran. The decline eased concerns over potential disruptions to crude supplies from the Middle East.
West Texas Intermediate (WTI) crude settled at $64.37 per barrel, dropping 6%, while Brent crude slid 6.1% to $67.14. The pullback followed a 7% drop on Monday, as geopolitical tensions began to unwind.
The conflict had intensified after Israel launched strikes on Iranian nuclear sites on June 13, prompting fears that Tehran might retaliate by targeting vital oil transit routes or production facilities. However, after a limited Iranian missile response on a U.S. base in Qatar—with no reported casualties—diplomatic efforts led to a ceasefire agreement.
Investors had been particularly concerned about the potential closure of the Strait of Hormuz, a vital maritime route through which nearly a fifth of the world’s oil supply flows. Those fears have now subsided with the ceasefire, prompting traders to reverse the risk premium that had built up during the conflict.
Oil market analysts noted that prices have returned to pre-conflict levels as the threat to regional energy infrastructure diminished. The lifting of wartime restrictions within Israel and the absence of further major retaliatory actions from Iran helped reinforce market confidence.
Additional pressure on prices came from Washington’s signals regarding Iran’s oil exports. President Trump’s recent remarks suggested flexibility on China’s purchases of Iranian crude, despite ongoing U.S. sanctions. This added to expectations that more Iranian oil could reach the global market in the near term.
The recent developments underscore the sensitivity of oil prices to geopolitical risk, particularly in regions critical to global energy flows. For now, the ceasefire appears to have stabilized the outlook, though the situation remains fragile.