Oil and gas prices tumble following Israel-Iran ceasefire
Oil prices hit their lowest in two weeks on Tuesday after Israel agreed to the US president Donald Trump's proposal for a ceasefire with Iran.
Brent crude futures were down $3.82, or 5.3%, at $67.66 (€58.77) a barrel on Tuesday morning GMT. US West Texas Intermediate crude fell $3.75, or 5.5%, to $64.76 per barrel.
Israel has agreed to Mr Trump's proposal for a ceasefire with Iran after it achieved its goal of removing Tehran's nuclear and ballistic missile threat, prime minister Benjamin Netanyahu said in a statement posted by his office on Tuesday.
Mr Trump had announced on Monday that Israel and Iran had fully agreed to a ceasefire, adding Iran would begin the ceasefire immediately, followed by Israel after 12 hours. If both sides maintain peace, the war will officially end after 24 hours, concluding a 12-day conflict.
Iran is Opec's third-largest crude producer, and the easing of tensions would allow it to export more oil and prevent supply disruptions, a major factor in oil prices jumping in recent days.
Both the oil contracts settled over 7% lower in the previous session after rallying to five-month highs after the US attacked Iran's nuclear facilities over the weekend, stoking fears of a broadening in the Israel-Iran conflict.
Between 18 and 19 million barrels of crude oil and fuels pass through the Strait of Hormuz daily. File picture: AP /Kamran Jebreil
The direct US involvement in the war had also focused investors squarely on the Strait of Hormuz, a narrow and vital waterway between Iran and Oman, through which between 18 and 19 million barrels per day of crude oil and fuels flow, nearly a fifth of the world's consumption.
Concerns were growing any disruption to maritime activity through the strait would catapult prices, possibly into three-digit territory.
In the gas markets, Dutch and British wholesale front-month gas prices fell more than 10% on Tuesday morning on news of the ceasefire news, removing the risk premium the market had priced in for potential oil and gas supply disruptions.
The benchmark Dutch front-month contract at the TTF hub fell by €4.61 to €36.63 per megawatt hour (MWh).
The contract is trading at its lowest level since June 12, the day before the first Israeli strikes on Iran.
Tuesday's drop is all down to the news Israel agreed to US president Donald Trump's proposal for a ceasefire with Iran, a trader said.
"At the open today we have seen an incredible sigh of relief, with more than 10% being eroded from the price levels," consultancy Auxilione wrote on its daily market report.
Still, any breach to the ceasefire by any party would likely immediately inject concerns back into the market, they cautioned.
Israel has said Iran has already violated the ceasefire and that it would respond.
Gas prices had been trading at 11-week highs before over concerns the hostilities could lead to a closure of the Strait of Hormuz, locking in around 20% of global liquefied natural gas (LNG) supply.
Reuters
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Israel and Iran continue to exchange fire despite Trump's ceasefire declaration
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It was as fragile as his ego. Before the parties involved had a chance to speak, Donald Trump was doing a lap of honour around the world, hailing a ceasefire between Israel and Iran as a historic victory for his leadership. Trump, who has been given a terrifying nickname by Iran , posted slogans, shared self-congratulatory graphics - including one declaring 'TRUMP WAS RIGHT ABOUT EVERYTHING' - and praised himself as the man who had brought peace to a region on the brink of war. Within hours, as always, his work and his words had crumbled. The ceasefire disintegrated almost as soon as it was announced, exposed as yet another hollow stunt from a president obsessed with headlines over substance. It comes as new dementia fears were raised about Donald Trump after viewers spotted a mysterious clue in his suit . Read More Related Articles Donald Trump branded 'dumbest President ever' after stunning six-word geography blunder Read More Related Articles Shocking moment visibly furious Trump swears live on TV as pressure rises over Iran What the US president trumpeted as a major diplomatic breakthrough has instead unravelled as yet another hollow promise, one forged not through serious negotiation or international consensus but through political theatre, self-promotion, and an alarming disregard for the complexity of the conflict he claimed to resolve. The ceasefire, announced to great fanfare, lasted only a few hours before violence resumed. Missiles were once again fired, tensions reignited, and hopes for calm were extinguished before they had the chance to take hold. An angry Donald Trump swore on CNN (Image: AP) True to form, Trump took to his personal platform, Truth Social, not to urge restraint or focus on regional stability, but to praise himself. 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