Oil prices tumble down as Iran-Israel ceasefire appears to be holding

Dubai: Oil prices extended their sharp decline on Tuesday, while global stock markets gained ground as signs of a stabilising ceasefire between Iran and Israel helped calm investor fears about supply disruptions in the Middle East.

Brent crude and West Texas Intermediate (WTI) futures fell nearly 5% in volatile trading, with both contracts retreating after a brief rebound sparked by accusations from Israel and Iran that the other side had violated the truce. Markets took a sharper turn downward after US President Donald Trump delivered a strongly worded rebuke to both nations, urging them to honour the ceasefire.

“This morning’s ceasefire further reduced the perceived threat to Middle Eastern oil supply routes,” said David Morrison, senior market analyst at Trade Nation. His comments reflect a growing sentiment among investors that the risk premium built into oil prices due to geopolitical tensions is rapidly unwinding.

Iran’s President Masoud Pezeshkian later said Tehran would continue to honour the ceasefire if Israel did the same. Israel, for its part, confirmed it had refrained from launching further strikes following a call between Trump and Israeli Prime Minister Benjamin Netanyahu.

Crude prices were further pressured by Trump’s indication that China may be allowed to continue purchasing Iranian oil — a statement seen by traders as a possible easing of sanctions enforcement by Washington. This added to concerns about rising global supply.

Oil had already slumped over 7% on Monday after Iran’s retaliation to US airstrikes — limited missile fire toward a US military base in Qatar — was viewed as largely symbolic. Markets were also reassured that Iran had not attempted to block the Strait of Hormuz, a critical chokepoint through which nearly 20% of the world’s oil supply flows.

The retreat in oil prices provided relief to inflation-wary investors and added fuel to the rally in equity markets. Lower energy costs could support consumer spending and reduce pressure on central banks to maintain higher interest rates.