LONDON :Oil prices extended losses to hit a two-week low on Tuesday after Israel agreed to U.S. President Donald Trump’s proposal for a ceasefire with Iran, alleviating worries over supply disruptions in the Middle East.
Brent crude futures were down $2.48, or 3.5 per cent, at $69 a barrel by 0927 GMT. U.S. West Texas Intermediate crude fell $2.37, also 3.5 per cent, to $66.14.
Both contracts lost as much as 5 per cent in early trade after Trump announced a ceasefire agreement between Israel and Iran.
Israel has agreed to 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.
“Oil prices fell sharply, as US strikes on Iranian nuclear facilities failed to trigger a wider conflict that could pose a threat to regional supplies,” Barclays said in a note.
Trump said that a “complete and total”ceasefire will take effect with a view to ending the Israel-Iran conflict.
However, doubts remain over whether the ceasefire will hold after Israel said it had ordered its military to strike Tehran in response to what it said were missiles fired by Iran.
Iran denied that it had violated the ceasefire.
The 12-day war has triggered high volatility in oil prices, with Brent crude trading in a $10 range on Monday, its widest since July 2022.
Both oil contracts settled more than 7 per cent down in the previous session, having rallied to five-month highs after the U.S. attacked Iran’s nuclear facilities over the weekend.
The direct U.S. involvement in the war also focused investors 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, accounting for nearly a fifth of the world’s consumption.
“The geopolitical premium has deflated, but tensions between Israel and Iran remain unresolved – and the risk of missteps and renewed escalation still lingers,” said SEB analyst Ole Hvalbye.
