Oil prices plunge as Iran-Israel ceasefire eases supply concerns; Crude futures drop Rs 316

Crude Oil Prices, Global Markets

As of 12:15 PM IST (0645 GMT), Brent crude futures were down $3.82, or 5.3 per cent, at $67.66 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped $3.75, or 5.5 per cent, to $64.76 per barrel. On the domestic front, crude oil futures on the MCX for July delivery fell ₹316, or 5.23 per cent, to ₹5,730 per barrel in a turnover of 10,985 lots.

The sharp retreat in oil prices follows a brief but intense escalation in tensions, during which crude futures had surged to five-month highs. The earlier spike came after the U.S. launched airstrikes on Iran’s nuclear facilities over the weekend, raising concerns that the conflict might spill into a broader regional war and potentially choke key shipping lanes.

However, a swift diplomatic turnaround appears to have steadied nerves in global energy markets.

In a statement posted by the Israeli Prime Minister’s Office on Tuesday, Prime Minister Benjamin Netanyahu said Israel had agreed to Trump’s ceasefire plan after achieving its goal of neutralising Tehran’s nuclear and ballistic missile capabilities.

Trump had announced the ceasefire terms late Monday, stating that Iran would begin the truce immediately, while Israel would follow after 12 hours. If both parties maintain calm, the ceasefire will become permanent after 24 hours, bringing a formal end to the 12-day conflict.

Iran, a key member of OPEC and the third-largest oil producer in the group, plays a critical role in global supply chains. The de-escalation paves the way for Iran to resume or even increase oil exports, significantly reducing concerns about near-term supply shocks.

Analysts noted that the decline in prices was also driven by participants trimming positions amid weaker spot demand in India’s domestic market.

Traders are now recalibrating their positions after the recent rally, with oil prices settling over 7 per cent lower in the previous session, breaking a multi-session winning streak.

The situation had previously drawn investor focus to the Strait of Hormuz—a strategic chokepoint between Iran and Oman—through which nearly a fifth of global oil consumption flows daily. Any disruption to shipping activity there could have sent prices soaring into triple digits. With tensions cooling, those fears have eased for now.

Market Outlook:

With crude prices pulling back and diplomatic channels re-engaged, market participants are watching for further developments on the ceasefire's durability and any changes to sanctions or production policy from Iran or OPEC.