Oil prices are down sharply while stocks are up on Tuesday morning in Asia after President Donald Trump said Israel and Iran have agreed to a “complete and total” ceasefire.
Benchmark US West Texas Intermediate oil futures were 3.6% lower at $66.04 a barrel at 8:48 p.m. ET on Monday while international Brent crude oil futures were 3.6% lower at $68.93 a barrel.
The declines extended losses of 7.2% for both grades on Monday. Oil prices have now reversed gains from June 12, a day before Israel struck Iran.
US stock futures were higher:
S&P futures: up 0.5% at 6,077.07 at 8:55 p.m. ETDow futures: up 0.5% at 42,895.05Nasdaq futures: up 0.8% at 22,075.67.
Oil prices were already moving lower after Iran’s retaliatory strikes on a US airbase in Qatar on Monday, following the American forces’ strikes on three Iranian nuclear sites on Sunday.
Even though Iran targeted US military assets, markets are relieved that Iran did not target the Strait of Hormuz, a key shipping route for the global oil and gas trade, wrote analysts at Rystad Energy, a research and intelligence firm.
Tehran’s strikes on US’s airbase in Qatar signaled “a possible desire from Iran to de-escalate by inflicting minimal damage to US infrastructure in the region,” wrote the Rystad Energy analysts.
Qatar said Iranian missiles were intercepted. US officials said there were no reports of casualties.
The energy markets are now focused on developments in the Strait of Hormuz, where a quarter of seaborne oil and a fifth of global liquified natural gas trade passes. If the Hormuz is impacted and closes, the markets may turn again.
“The waterway handles significant volumes for global markets and its importance cannot be understated,” added Janiv Shah, a vice president of oil markets analysis at Rystad Energy.
In an earlier Truth Social post, Trump described Iran’s retaliatory attack as a “very weak response,” and thanked Tehran for giving the US early notice of the strikes.
Ongoing developments in the Middle East, coupled with market swings, highlight the fluid nature of the current landscape.
As Deustche Bank analysts wrote in a note on Monday, “the situation in the Middle East is live and things can change quickly.”
