Brent oil prices fell below $100 after the US and Iran announced a two-week ceasefire. The announcement saw the price of a barrel fall as low as $92, its lowest level since mid-March. The impact extended beyond energy markets, also triggering rallies in global stock market futures, a steep depreciation of the US dollar, and a rise in gold prices, which touched three-week highs. Following the build-up in tensions caused by the ongoing war and the resulting closure of the Strait of Hormuz by Iran, the last-minute agreement, even if not yet entirely clear in its terms, was welcomed with relief by financial markets. It has led to markets pricing in, perhaps somewhat optimistically, a realistic prospect of an end to the conflict and a return to some normality in the Persian Gulf. However, the ceasefire appears fragile, and the eleventh-hour shift by the US administration in agreeing to discuss the terms proposed by Iran does not yet mean that a longer-lasting agreement will be in place once the two-week ceasefire comes to an end. Against this backdrop, the price of a barrel has fallen considerably from its recent highs, but it remains 22% higher than at the beginning of the war. More clarity may be needed before we see any further substantial price declines.
Source: ActivTrader
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