Following the announcement of an agreement between Israel and Iran regarding a ceasefire, oil prices significantly decreased. Investors reacted to the reduced risk of supply disruptions of energy resources from the Middle East, which is traditionally one of the world’s main oil-producing regions.
This is reported by Finway
Decline in Brent and WTI Oil Prices
On Tuesday, futures for Brent crude oil fell by $2, reaching $69.4 per barrel, while WTI prices dropped to $66.5 per barrel. This trend was driven by statements from U.S. President Donald Trump about achieving a ceasefire between Israel and Iran. Although the agreement was later violated, the market reacted positively due to the decrease in geopolitical tension.
“Oil prices sharply fell following U.S. President Donald Trump’s announcement of a ceasefire between Israel and Iran (although it was soon violated), which reduced concerns about supply disruptions of ‘black gold’ from the main oil-producing region.”
U.S. Reaction and the Natural Gas Market
The U.S. President urged energy producers to keep oil prices low, and the U.S. Department of Energy was tasked with increasing production in the short term. The head of the department, Chris Wright, stated that the team is already working on this task. Meanwhile, experts note that in recent years, American oil companies have been hesitant to sharply increase production due to the low price of WTI, which in some fields was below the cost of extraction.
Additionally, in light of the news about the ceasefire, natural gas prices in the European Union significantly dropped. On Tuesday, its price decreased by nearly 12% – to €35.75 per megawatt-hour, or $436.15 per thousand cubic meters.