Ceasefire Sparks Slide in Oil and Lift for Global Stocks

Arabian Post

4 hours ago

Markets surged as President Donald Trump announced a ceasefire agreement between Israel and Iran on Monday, calming fears of a broader Middle Eastern conflict and triggering a sharp drop in oil prices. With Brent crude falling nearly 5% in Asian trading and U.S. West Texas Intermediate declining by around 3%, investors responded swiftly to the prospect of restored supply and reduced geopolitical risk. At the same time, equity futures rallied, with S&P 500 futures up roughly 0.6%, while Asia‑Pacific indexes posted their strongest gains in weeks.
Trump posted on Truth Social that the ceasefire would begin with Iran immediately and Israel after 12 hours, bringing 'the 12‑day war' to an official close after 24 hours. Iranian Foreign Minister Abbas Araghchi, however, noted that Tehran would cease response once Israeli strikes stopped, falling short of recognising a formal agreement. Israel has yet to issue a formal statement confirming the terms.
Analysts welcomed the news. Tony Sycamore at IG commented that the ceasefire announcement had wiped out much of the risk premium embedded in crude prices. Prashant Newnaha of TD Securities noted that markets are now shifting focus to other macroeconomic factors, such as global trade negotiations. Asian investors echoed those views; MSCI Asia‑Pacific shares index surged by up to 1.8%, with Japan's Nikkei climbing over 1.3%.
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The drop in oil also weighed on safe‑haven assets. The Bloomberg Dollar Spot Index declined around 0.2%, while gold prices eased approximately 1%. Ten‑year U.S. Treasury yields remained largely unchanged, reflecting a shift from flight‑to‑safety to risk‑on sentiment.
This market rebound comes following a tumultuous fortnight that began with Israeli strikes on Iran's nuclear sites on 12 June, prompting a 7–11% surge in oil prices and volatility in global equities. That spike triggered U.S. and global inflation concerns, especially among economies reliant on Middle Eastern oil routes through the Strait of Hormuz. Iran responded symbolically by targeting a U.S. base in Qatar, but its abstention from disrupting tanker movements helped ease immediate supply fears.
Energy analysts warn, however, that the ceasefire might only provide temporary relief. Iran remains OPEC's third largest crude producer, and its return to sustained output is key to stabilising markets. Still, doubts remain about how long the truce will hold and whether investors may shift focus to longer‑term oil fundamentals, such as demand trends, OPEC+ output decisions, and U.S. shale activity.
Major stock indexes in the U.S. and Europe mirrored Asia's bounce. S&P 500 futures rose around 0.5–0.6%, while FTSE futures climbed about 0.4%, and EUROSTOXX 50 futures gained 1.3%. The Nasdaq and Dow Jones saw similar optimism ahead of the Federal Reserve's next policy announcement and the looming U.S. tariff deadlines.
Economic analysts suggest this shift in sentiment reflects growing energy independence in the U.S. thanks to its shale boom. Markets have become less sensitive to geopolitical supply shocks, reducing volatility when conflicts flare in the Middle East. Ali Meli of Monachil Capital Partners told MarketWatch that Middle Eastern oil is far less critical to U.S. energy security than it once was.
Even so, the outlook remains conditional. Investors remain alert to signs of U.S. military intervention, which could reignite the risk premium on oil and trigger renewed equity turmoil. Forecasts suggest crude could surge towards $85 or even $100 per barrel if Iranian exports face significant disruption.
Financial markets are now entering a new phase where energy and diplomacy intersect with global trade and central bank policy. The immediate easing in oil and equity rallies reflect relief at the ceasefire, yet the depth and durability of that recovery will hinge on whether the truce endures and how swiftly macroeconomic concerns reassert themselves.