Oil Prices Drop After Israel and Iran Agree to Cease Attacks

SadaNews - Oil prices fell after Israel and Iran agreed to stop mutual attacks following a rise in violence that threatened to undermine efforts to end the war in the Middle East.

Brent crude fell close to $93 per barrel after closing slightly higher on Monday, while West Texas Intermediate crude traded below $91 per barrel.

Israeli Prime Minister Benjamin Netanyahu stated that his country has halted fire against Iran for now, but will respond if Tehran launches another attack. Similar statements were reported by Iranian media.

The escalation of hostilities has put broader negotiations to end the war in the Middle East at risk, prompting U.S. President Donald Trump to call for de-escalation. The fragile ceasefire remains in effect, but the Strait of Hormuz remains closed due to the dual blockade imposed by Tehran and Washington, cutting off oil, fuel, and natural gas supplies across the globe.

In a sign of ongoing risks in the region, U.S. forces disabled an empty oil tanker in the Gulf of Oman on Monday, after it "breached" the blockade while attempting to sail to an Iranian port, according to the U.S. Central Command announcement on its X platform account. The Israeli military also intercepted a "suspicious aerial target" coming from Yemen.

Full Victory in Two Weeks

Late Monday evening, Trump stated that the United States would announce "full victory" in its war with Iran over the next two weeks, during remarks made at a virtual Republican party rally in South Carolina. He added that negotiations with Tehran are ongoing and reiterated that oil prices would drop as soon as the conflict ends.

Even if a peace agreement is reached between the United States and Iran, the U.S. will face numerous obstacles to resuming normal oil flows. Among these obstacles are the need to clear mines in the Strait of Hormuz, the likelihood that it could take months to restart closed fields, as well as the need to repair damages to energy infrastructure caused by drone strikes and missiles.

Al Salazar, head of the oil and gas research department at the consulting firm "Envirois," stated that oil prices are still "affected by circulating news," adding: "We believe that prices still need to stabilize at three digits to fully account for declining inventory levels."

In the latest trading, August Brent crude contracts fell by 0.7% to $93.57 per barrel by 11:00 a.m. Singapore time. July West Texas Intermediate crude contracts also fell by 0.8% to $90.61 per barrel.