Oil prices plunge as Trump announces ceasefire in the Mideast
The plunge – which followed a roller-coaster session on June 23 – took crude prices to well below their level on June 12, the day before Israel attacked Iran. PHOTO: REUTERS
SINGAPORE – Oil prices dropped sharply on June 24 as US President Donald Trump announced a tentative ceasefire between Iran and Israel.
West Texas Intermediate for August fell as much as 5.1 per cent to US$65.02 a barrel in early trading in Asia. The plunge – which followed a roller-coaster session on June 23 that ended in steep losses – took prices to well below their level on June 12, the day before Israel attacked Iran.
WTI traded at US$65.54 a barrel at 6.47am in Singapore.
In a move that will lower crude's risk premium, Mr Trump said that Israel and Iran had agreed to a 'complete and total ceasefire,' which would begin at about midnight New York time, according to a post on Truth Social.
The global oil market has been rocked by the crisis in the Middle East on concerns that the conflict could disrupt supplies from the region that pumps about a third of the world's crude.
Prices initially spiked on June 23, then retraced gains, as Israel, Iran and the US all avoided striking oil-related infrastructure, with Tehran also opting not to try blocking the Strait of Hormuz.
The crisis erupted earlier in June as Israel attacked Iran in a bid to eradicate its nuclear programme, decimate its leadership, and degrade its military, with Tehran firing missiles in reply. In a major escalation, Mr Trump then ordered a weekend strike against the Islamic Republic's nuclear sites. Iran's retaliation to that move was a limited missile salvo at a US air base in Qatar.
The tentative ceasefire in the Middle East – if it takes effect and lasts – may pull traders' main focus back to the crude market's underlying fundamentals. There are widespread expectations that oil supplies will run ahead of demand in the second half of 2025, spurring a build-up in global stockpiles.
The Opec+ alliance – which includes Iran as member – has been reactivating idled capacity at a rapid pace in a bid to recapture market share. Further increases in collective supplies are expected in the months to come.
Mr Trump has made plain that he favours cheaper energy in a bid to buttress his economic agenda as he pushes on with his aggressive trade policy. On June 23, he demanded that energy producers push down crude prices following the US military strikes on Iran, while also urging the Energy Department to boost drilling. BLOOMBERG
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