TBT DESK: Oil prices dropped sharply by nearly 5% on Tuesday following the announcement that Israel had agreed to a ceasefire with Iran.
Brent crude, the international benchmark for oil prices, fell to $68 per barrel, a decrease that brought it below the levels seen before Israel launched missile strikes on Iran's nuclear sites on June 13, reports BBC.
In recent days, oil prices had surged amid concerns that Iran might disrupt global oil supplies by blockading the Strait of Hormuz, a crucial shipping route for oil and gas.
The announcement of the ceasefire sent stock markets in the UK, Europe, and Asia rising.
US President Donald Trump confirmed that the ceasefire was "now in effect," which was later corroborated by Israel's confirmation of the agreement.
Oil prices had spiked to as high as $81 per barrel since the missile strikes began, raising concerns about a potential increase in the cost of living as prices for petrol, diesel, and business expenses soared.
"If the ceasefire is followed as announced, investors might expect the return to normalcy in oil," said Priyanka Sachdeva, senior market analyst at Phillip Nova.
However, she added, "the extent to which Israel and Iran adhere to the recently announced ceasefire conditions will play a significant role in determining oil prices."
Despite the initial drop, oil price declines were tempered after Israel accused Iran of violating the ceasefire by launching a missile strike.
In response to the ceasefire, stock markets showed positive movement. The FTSE 100 index in the UK rose by 0.4% in early trading, while the CAC-40 in France increased by 1.4%, and Germany's DAX added 2%. In Asia, Japan's Nikkei share index ended the day up by 1.1%, and Hong Kong's Hang Seng increased by 2.1%.
President Trump urged both Israel and Iran to respect the ceasefire, emphasizing the need for both sides to avoid any violations. Israel confirmed that it had agreed to the ceasefire after "eliminating the Iranian nuclear threat."
The ongoing Middle East conflict had driven global energy prices higher, stoking fears of rising energy bills and petrol costs worldwide.
However, wholesale UK gas prices dropped by 12.5% on Tuesday after spiking higher, with Qatar-one of the largest suppliers of liquefied natural gas-being a key player in the region.
Earlier, on Monday, Iran had launched missiles at a US military base in Qatar in retaliation for American strikes on Iran's nuclear sites.
The recent oil price hikes had reignited concerns that increased energy costs could trigger higher prices for everyday goods, from petrol to food, much like the global price increases seen after Russia's invasion of Ukraine three years ago.