Agency. Oil prices fell more than 5 percent on Tuesday after Israel said it had agreed to US President Donald Trump’s proposal for a bilateral ceasefire with Iran. Fears of a shock to energy markets eased after a 12-day war between Israel and its arch-rival Iran.
Brent was down 5.2 percent at $67.75 a barrel at around 0650 GMT on Tuesday, while the main US crude contract, WTI, was down 5.4 percent at $65.01 a barrel. “Market participants welcomed the potential end to the conflict,” wrote Lee Hardman at MUFG. He said Brent had “almost completely reversed all the gains since the conflict began.”
“A similar shift is taking place in the FX market, with the US dollar giving back recent gains.” “If Middle East risks are now in the background as a market driver, the US dollar’s weakness is more likely to resume,” he said.
Crude oil prices briefly rose on Monday morning on the prospect that Iran could retaliate for a weekend US attack on its nuclear facilities by blocking oil shipments through the strategic Strait of Hormuz.
But they fell as much as 7 percent after Iran said it had fired missiles at a key US base in Qatar and that oilfield assets were unaffected.
War premium –
“Tehran played well. Their ‘retaliation’ hit a US base in Qatar – loud enough for the headlines, quiet enough not to shake the oil market,” said Stephen Innes of SPI Asset Management, “and once that became clear, the war premium was out of crude.”
The Israeli government said in a statement on Tuesday that the country had “achieved all objectives” in its war with Iran and that it had eliminated “an immediate dual existential threat: nuclear and ballistic.” “Israel will respond strongly to any violation of the ceasefire,” the statement said.
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