The prices of the crude oil grades went down by about 6 per cent on Tuesday on expectations that the ceasefire between Israel and Iran will reduce the risk of oil supply disruptions in the Middle East.
Brent crude was sold at $67.14 per barrel yesterday after it declined by $4.34 or 6.1 per cent and the US West Texas Intermediate (WTI) crude went for $64.37 per barrel after it shed $4.14 or 6.0 per cent.
The ceasefire was on shaky ground with US President Donald Trump accusing both Israel and Iran of violating it just hours after it was announced.
Israel said Tuesday it had detected a missile launched from Iran and promised to “respond forcefully” but Iran denied firing any weapons.
Reuters reported that President Trump had brokered the ceasefire in a phone call with Israel’s leader, Mr Benjamin Netanyahu, who had agreed to stop bombing Iran if the nation stopped bombing it, according to an unnamed White House official.
Earlier this week, following the US strikes on Iran’s nuclear facilities, oil surged in anticipation of Iran’s potential closure of the Strait of Hormuz, which handles a third of global maritime oil exports.
Market analysts have expressed worry whether the Israel-Iran truce can hold, given the deep mistrust between the two nations.
Prices also tumbled after Mr Trump said China, the world’s biggest oil importer, can continue to purchase oil from Iran.
Pressure also came from US consumer confidence, which unexpectedly deteriorated in June as households increasingly worried about job availability and economic uncertainty from Trump’s tariffs.
Kazakhstan raised its forecast for oil output at the Chevron-led Tengiz oilfield, the country’s largest, to 35.7 million metric tonnes in 2025 from 34.8 million tonnes expected previously.
Kazakhstan is a member of the Organization of the Petroleum Exporting Countries and its allies, OPEC+. Several other OPEC+ members have also been increasing output.
The American Petroleum Institute (API) estimated that crude oil inventories in the United States fell again, this time by 4.277 million barrels in the week ending June 20. The official government data from the US Energy Information Administration (EIA) will be released later on Wednesday.