Oil prices are falling on Tuesday morning after US President Donald Trump said overnight that Iran and Israel have reached a ceasefire agreement that will take effect on Tuesday at 06:00 CEST. As a result, oil prices have been pushed down to their lowest level in more than a week, according to Reuters.
A barrel of the European reference oil, Brent, costs USD 69.34 on Tuesday morning compared to USD 76.20 on Monday afternoon. At the same time, US WTI oil is trading at USD 66.33 compared to USD 73.05 on Monday afternoon.
The two nations agreed on Monday to a ceasefire that will begin by Iran immediately, followed by Israel after 12 hours. If Iran and Israel manage to keep the peace, the war will be officially over in 24 hours, the US president said on Monday.
”If the ceasefire is honored as announced, investors can expect a return to normalcy in oil. Going forward, the extent to which Israel and Iran abide by the recently announced ceasefire conditions will play a significant role in oil prices,” Priyanka Sachdeva, senior market analyst at Philip Nova, told Reuters.
With eased tensions, Iran will have the ability to export more oil and prevent supply disruptions, which has been a major cause of the recent spike in oil prices. Investors have been particularly concerned that the Strait of Hormuz will be closed by Iran, as a fifth of world consumption is transported through the strait.
With the overnight fall, a resistance level of between USD 78.40 and USD 80.77 has been set. Therefore, it will take something extremely unexpected and damaging to supply for crude oil prices to break through that resistance level, says Tony Sycamore, analyst at IG.
