Oil prices dropped sharply for the second consecutive day, driven by cautious optimism over de-escalating conflict in the Middle East, despite fresh accusations of ceasefire violations by both Israel and Iran.
On Tuesday, Brent crude fell by 3.6%, trading at $68.92 per barrel, while U.S. West Texas Intermediate dropped to $66.06, a two-week low.
This comes after U.S. President Donald Trump brokered a temporary ceasefire between the two archrivals, only to later criticize both nations for failing to honour the deal.
“I didn’t like the fact that Israel unloaded right after we made the deal,” Trump said. “They didn’t have to unload, and I didn’t like the fact that the retaliation was very strong.” Iran, meanwhile, denied launching missiles in response, despite Israeli Defense Minister Israel Katz ordering renewed strikes on Tehran.
The ceasefire, though shaky, has helped to deflate what analysts call the “geopolitical premium”—the price hike added by fear of supply disruptions. On Monday, Brent crude had swung within a $10 range, its wildest fluctuation since July 2022.
The earlier weekend had seen prices spike to five-month highs after U.S. forces struck Iranian nuclear targets, triggering concerns of a full-scale regional war.
Still, oil experts caution against reading too much into short-term drops. About 20% of the world’s oil, some 18 to 19 million barrels per day, flows through the Strait of Hormuz, a narrow chokepoint between Iran and Oman. A single strike or retaliation could reignite the volatility.
“The geopolitical premium has deflated,” said Ole Hvalbye, analyst at SEB, “but tensions between Israel and Iran remain unresolved. The risk of missteps and renewed escalation still lingers.”
Read more on Oil prices dip as U.S. stockpiles rise, Saudi Arabia slashes Asian crude rates
