Crude oil prices plunged about 9% overnight and then slid another 2–3% on Tuesday, as markets breathed a sigh of relief following a reported ceasefire between Iran and Israel and signs that oil flows through the Strait of Hormuz remain uninterrupted
📉 Key Drivers Behind the Fall
- Iran-Israel Ceasefire
Reports of a phased “forever” ceasefire dramatically reduced fears of Middle East disruptions, triggering an initial 9% drop - No Strait of Hormuz Closure
Despite missile launches, Iran refrained from closing the Strait—a key oil transit route—further easing supply concerns - Technical Unwinding & Risk Rally
The de-escalation triggered a broader rally in global markets: equities jumped, the dollar weakened, and long-risk assets surged as oil’s geopolitical premium unwound - Cooling Inflation Expectations
Lower crude reduces pressure on global inflation, aiding central banks like the Fed and ECB in pausing or slowing rate hikes - Reduced Cost Pressure for Refiners
Indian OMCs like BPCL, HPCL, IOC saw stock gains (3–5%) as input costs eased with Brent dipping under $70/barrel
🌐 Broader Market Impact
- Oil Levels: U.S. West Texas Intermediate traded near $65.50–66/bbl, while Brent hovered around $69–70/bbl
- Equity Positive: Global equity futures rallied—U.S. futures, Asia, and Europe rose on the sentiment shift reuters.com.
🔭 What to Watch
- Ceasefire Durability: Renewed rocket fire or military strikes could re-inflate oil prices.
- Fed Commentary: Upcoming remarks from Jerome Powell and other central bank officials will test the inflation narrative.
- OPEC+ Moves: Decisions at the next OPEC meeting—including output cuts or supply adjustments—could redirect market momentum.
