Despite a declared ceasefire between Israel and Iran, oil prices pared back significant losses, propelled higher by widespread doubts over the truce’s longevity. Brent crude initially plunged on news of the agreement, but this optimism proved short-lived as conflicting reports of continued hostilities emerged.
The global oil benchmark, Brent crude, which had seen a substantial decline following the ceasefire announcement, saw a notable recovery as uncertainty regarding the truce’s effectiveness grew. Reports from Israel’s military of fresh Iranian missile barrages, though disputed by Iranian media, were enough to temper the initial market relief and push prices upwards.
The market’s quick adjustment reflects the inherent “war premium” in oil prices, which is sensitive to geopolitical stability in the Middle East. While some of this premium is being unwound due to hopes of de-escalation, the rapid rebound of prices indicates that traders remain wary of potential flare-ups and their impact on crucial oil supplies.
Beyond the energy sector, global stock markets generally reacted positively to the ceasefire news, with indices like the FTSE 100 recording gains. Travel and tourism-related stocks saw a significant boost, anticipating a more stable operating environment. However, major oil company shares experienced declines, reflecting the perceived reduction in risk.
Ceasefire Doubts Propel Oil Prices Higher After Initial Dip
