Oil prices fall 2% as Trump announces ceasefire between Iran and Israel, Brent below $70/bbl

Global crude oil prices fell over 2% on Tuesday morning as US president Donald Trump announced a complete ceasefire in the ongoing Iran-Israel conflict.

Around 8:25 am, the August contract of Brent was trading at $69.98 on the Intercontinental Exchange, higher by 2.14% from its previous close. Similarly, the August contract of West Texas Intermediate on the NYMEX fell 2.25% to $67.06 a barrel.

Also read: Israel and Iran agree on ceasefire to end 12-day war, Trump says

Taking to social media platform Truth Social, Trump said, "CONGRATULATIONS TO EVERYONE! It has been fully agreed by and between Israel and Iran that there will be a Complete and Total CEASEFIRE (in approximately 6 hours from now, when Israel and Iran have wound down and completed their in progress, final missions!), for 12 hours, at which point the War will be considered, ENDED!"

"Officially, Iran will start the CEASEFIRE and, upon the 12th Hour, Israel will start the CEASEFIRE and, upon the 24th Hour, an Official END to THE 12 DAY WAR will be saluted by the World. During each CEASEFIRE, the other side will remain PEACEFUL and RESPECTFUL. On the assumption that everything works as it should, which it will, I would like to congratulate both Countries, Israel and Iran, on having the Stamina, Courage, and Intelligence to end, what should be called, “THE 12 DAY WAR.” This is a War that could have gone on for years, and destroyed the entire Middle East, but it didn’t, and never will! God bless Israel, God bless Iran, God bless the Middle East, God bless the United States of America, and GOD BLESS THE WORLD," he added.

The announcement of the ceasefire comes after Iran on Monday attack US military bases in Qatar raising concerns in retaliation to American attack on its nuclear sites on Saturday of major regional conflict.

Iran's retaliation sparked fears

Iran, however, has denied an agreement on a ceasefire. The foreign minister of Iran, Seyed Abbas Araghchi wrote on X: "As Iran has repeatedly made clear: Israel launched war on Iran, not the other way around. As of now, there is NO "agreement" on any ceasefire or cessation of military operations."

He added, "However, provided that the Israeli regime stops its illegal aggression against the Iranian people no later than 4 am Tehran time, we have no intention to continue our response afterwards. The final decision on the cessation of our military operations will be made later."

Shortly before Trump posted about the ceasefire, Iran's Supreme Leader, Ayatollah Ali Khamenei wrote on his official 'X' handle: "“Those who know the Iranian people and their history know that the Iranian nation isn’t a nation that surrenders."

Oil prices soared over 10% after Israel's attack on Iran on June 13. Since than the possibility of the a larger regional war and a likely blockade of the Strait of Hormuz kept the oil prices elevated.

Also read: Israel-Iran war eases with total ceasefire: Who blinked first, and how did the breakthrough happen?

Kotak Institutional Equities on Monday said, "As the conflict between Iran and Israel intensifies and enters the second week, concerns are rising. There is a risk that more countries could get involved. Also, there are worries that Iran could disrupt/close SOH (Strait of Hormuz). With 20 mb/d (million barrels per day) of oil and 83-84 mt/year (million tonne per year) of LNG, SOH accounts for 27%/20% of global oil/LNG trade."

Noting that it is unlikely that strait will be impacted for long, the report said that any short-term impact can lead to a further spike in oil prices.

Also read: Crude oil prices fall after Israel-Iran ceasefire; MCX crude oil slips below ₹6,000 level

Traders will now await the implementation of the ceasefire plan.