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Oil Prices Plunge as Israel Accepts Ceasefire Proposal with Iran

Daily Alerts June 24, 2025

Published On: June 24, 2025

Business · Energy · Market News
Tags: oil prices, ceasefire, Israel, Iran, Middle East tensions, Brent crude, WTI, Strait of Hormuz

Overview

Global oil benchmarks dropped significantly on Tuesday after news broke that Israel had agreed to a U.S.-facilitated ceasefire with Iran, easing fears of a broader Middle East escalation. With the immediate risk of supply disruptions diminishing, both Brent crude and U.S. West Texas Intermediate (WTI) fell sharply, while equity markets rallied worldwide.

Oil Prices Plunge as Israel Accepts Ceasefire Proposal with Iran
 Oil Prices Plunge as Israel Accepts Ceasefire Proposal with Iran


1. Why Oil Took a Hit

Ceasefire Announcement: Former U.S. President Donald Trump declared that Israel and Iran had agreed to a lasting ceasefire in a statement on Truth Social and NBC News, promising remaining hostilities would end within 12 hours of the announcement (reuters.com).

Market Response:

  • Brent crude plunged ~5.3%, touching ~$67.66 per barrel — its lowest point since early June (reuters.com).

  • U.S. WTI dropped ~5.5%, falling to ~$64.76 per barrel (reuters.com).

This followed a prior 7% decline on Monday after Iran’s limited strike on a U.S. base in Qatar and, crucially, no disruption in the Strait of Hormuz — a key shipping lane for global oil transport (reuters.com).

Geopolitical Backdrop
Geopolitical Backdrop


2. Geopolitical Backdrop

Strait of Hormuz Risk: Earlier in June, Iran’s parliament voted to close the strait in retaliation to U.S. airstrikes on its nuclear sites. If carried out, such a move could severely disrupt 20–25% of global oil flows, triggering volatility . That threat, however, has subsided — at least temporarily.

Symbolic Missile Response: Iran chose to target a U.S. base in Qatar rather than oil infrastructure, signaling a calibrated response and possibly avoiding greater escalation (reuters.com).


3. Ripple Effects in Financial Markets

Stock Market Rally:

  • U.S. futures gained: S&P 500 +0.6%, Nasdaq +0.9% (reuters.com).

  • In Europe, EURO STOXX50 futures rose 1.3%, FTSE +0.4% (reuters.com).

  • In Asia, Japan’s Nikkei +1.4%, CSI300 +1%, Hang Seng +1.7% (reuters.com).

Currencies and Bonds:

  • The U.S. dollar weakened vs. yen and euro, hitting ~¥145 and $1.16, respectively (reuters.com).

  • 10-year U.S. Treasury yields edged higher, as rate-cut expectations were partially offset by rebound in equities .

Commodities:

  • Gold prices slipped ~0.6%, down to $3,346/oz, as investors moved back into riskier assets (reuters.com).

  • Oil-sensitive sectors, such as airlines, saw gains due to anticipated lower fuel costs (markets.businessinsider.com).

4. Expert Insight & Technical Patterns

Market Analysts:

  • Tony Sycamore (IG) noted that the ceasefire announcement wiped out the recent “risk premium” in oil prices (reuters.com).

  • Priyanka Sachdeva (Phillip Nova) remarked that a sustained ceasefire would restore normalcy to oil markets (reuters.com).

Technical Resistance Levels:
Traders identified a resistance zone near $78–$80/barrel; only unexpected supply-side shocks could push oil above that range (reuters.com).

5. Potential Risks & What to Watch

Fragile Ceasefire:
The ceasefire agreement remains unverified by Iranian or Israeli authorities and could be easily destabilized by unexpected actions or statements (theguardian.com).

Alternative Flashpoints:

  • Any attempt to close the Strait of Hormuz would instantly tighten oil supply and send prices soaring (en.wikipedia.org).

  • Renewed strikes on oil infrastructure, such as fields or refineries, would reroute oil flows and spike premiums.

Geo-Economic Strategies:
In past surges, OPEC+ has released extra supply; this time, market sentiment remains comfortable, but major producers may still act if volatility returns .

Monetary Policy Impact:
Lower oil prices could ease inflation pressures, potentially reinforcing steady or dovish stances from central banks like the U.S. Federal Reserve — especially with rate decisions looming .


Conclusion

This sudden plunge in oil prices illustrates how volatile markets can be when geopolitical tension eases — even tentatively. While the focus now shifts to verifying the ceasefire and monitoring the Strait of Hormuz, investors must remain alert to any fresh conflict escalations. For now, markets have reclaimed some calm, pushing oil lower, stock futures higher, and risk sentiment blossoming — but the backdrop remains uncertain.

Source References:

  • “Shares rally, oil slumps as Trump announces Iran‑Israel ceasefire” — Reuters (reuters.com, en.wikipedia.org, reuters.com)

  • "Oil tumbles about 5% after Israel agrees to Trump's proposal" — Reuters, Jeslyn Lerh, June 24, 2025 (reuters.com)

  • “Rupee set to rally as crude dives on Israel‑Iran de‑escalation” — Reuters (reuters.com)

  • “What influences crude oil more? U.S. bombs or Iran's silent allies” — Reuters (reuters.com)

  • “Oil settles down 7% after Iran attacks US military base in Qatar”— Reuters (reuters.com)

  • “Strait of Hormuz – critical energy chokepoint” — Wikipedia (en.wikipedia.org)


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