Israel Declares Victory, Accepts Ceasefire; Oil Market Reacts Immediately

Global oil prices dropped sharply Tuesday morning after Israel agreed to a ceasefire proposal put forward by US President Donald Trump, signaling a potential end to nearly two weeks of conflict with Iran. Brent crude fell 3.5 percent to $69.00 per barrel by 08:30 GMT, while the US benchmark West Texas Intermediate (WTI) also dropped 3.5 percent to $66.10.

The market reaction reflected investor relief following 12 tense days of military escalation in the Middle East, which had briefly raised fears of disruption to global energy supplies. In Asia, stocks rose across the board with Tokyo finishing 1.1 percent higher, Shanghai gaining 1.2 percent, and Hong Kong jumping 2.06 percent. European markets also opened in positive territory, though oil majors like Shell and BP weighed on London’s FTSE 100, which edged up 0.3 percent. Paris rose 1.5 percent and Frankfurt climbed 1.8 percent.

Analysts attributed the decline in crude to diminishing concerns over a broader regional energy crisis. MUFG strategist Lee Hardman noted that Brent prices had now “almost fully reversed all of the gains since the conflict started.” He added that the US dollar, which had firmed during the crisis, was also weakening again as geopolitical risk faded.

The conflict briefly reignited market fears on Monday after Iran launched missiles at a US military base in Qatar in response to earlier American strikes on its nuclear facilities. However, with oil infrastructure left untouched and Tehran signaling restraint, prices quickly reversed course. Stephen Innes of SPI Asset Management remarked, “Tehran played it cool. Their ‘retaliation’ hit a US base in Qatar — loud enough for headlines, quiet enough not to shake the oil market’s foundations. And once that became clear, the war premium came crashing out of crude.”

In a statement issued Tuesday, the Israeli government declared it had “achieved all the objectives” of its campaign, claiming the elimination of “an immediate dual existential threat: nuclear and ballistic.” The statement warned that Israel would respond strongly to any ceasefire violations.

Meanwhile, currency markets responded to dovish comments from Federal Reserve Governor Michelle Bowman, who suggested she would support an interest rate cut in July if inflation remains stable. The dollar slipped against major currencies, with the euro rising to $1.1591 and the pound climbing to $1.3598. Investors now expect the Fed to resume rate cuts in September.

Among individual stocks, Virgin Australia surged after its dramatic return to the local share market, marking a recovery from near-bankruptcy over four years ago.

As of 08:30 GMT, key market figures showed broad optimism across global equities, easing of currency volatility, and a notable retreat in crude oil prices amid signs that the latest Middle East flare-up may be nearing resolution.