Oil Prices Slide to Two-Week Low as Ceasefire Eases Supply Fears
June 24, 2025 — Global oil prices continued their sharp descent on Monday, as energy traders reacted to an unofficial ceasefire declared by former U.S. President Donald Trump between Israel and Iran, easing fears of a broader Middle East conflict that could disrupt key supply routes.
Brent crude, the international oil benchmark, fell to $68.92 per barrel, marking a two-week low and extending recent losses. Meanwhile, U.S. West Texas Intermediate (WTI) dropped by 3.6% to settle at $66.06, signaling broad market confidence that an immediate supply crisis through the Strait of Hormuz may have been averted—at least temporarily.
The decline in oil prices reflects a broader market recalibration. Investors are adjusting their positions following Trump’s high-profile announcement of a “forever ceasefire” between Iran and Israel, even though both nations have exchanged accusations of violating the agreement since.
Relief Across Markets: Equities Rise, Dollar Softens, Gold Slips
The energy price dip was accompanied by a global shift in investor sentiment. Asian and European equity indices saw modest gains as the likelihood of all-out war appeared to recede. The U.S. dollar weakened slightly against major currencies, suggesting decreased appetite for risk hedging.
Gold prices, often a bellwether for geopolitical risk, also fell significantly. The precious metal slid 1.4% to $3,322 per ounce, hitting its lowest point since June 11, as safe-haven demand began to fade. Analysts noted that the combination of easing tensions and softening energy prices triggered a risk-on attitude, especially in sectors like travel, logistics, and manufacturing.
“Markets are trying to price in hope without certainty,” said Lena Gutierrez, senior commodities analyst at Fidelity Global. “It’s clear the ceasefire has had an immediate calming effect, but beneath the surface, geopolitical risk has not vanished—it’s simply paused.”
Structural Tightness Still Threatens Oil Stability
Despite the easing of short-term fears, energy analysts caution against overconfidence. The oil market remains structurally tight, with spare production capacity globally still constrained. Additionally, Iran’s economy continues to struggle under U.S. sanctions, limiting its ability to ramp up exports even if political conditions stabilize.
Should hostilities resume, experts say, supply threats could rapidly reemerge, especially with Iranian influence extending across multiple critical regions via proxy forces like the Houthis, Hezbollah, and Iraqi militias. Any renewed Israeli or U.S. military action targeting Iran’s infrastructure could provoke retaliation affecting pipeline routes, refineries, or maritime transit chokepoints.
“Even if you don’t have direct disruption in the Strait of Hormuz, you can see price volatility purely from perception,” noted Salim bin Rashid, an oil strategist at Qatar Energy Forum. “Energy markets are incredibly sensitive right now. One wrong move and prices could rebound dramatically.”
Trump’s Warning Underscores Fragility
In a development that undercut some of the optimism, Donald Trump admitted later in the day that both Israel and Iran had violated aspects of the ceasefire, raising questions about the truce’s durability. His acknowledgment of breaches—and his pledge of “serious consequences” for future violations—added a layer of uncertainty to an already fluid situation.
The lack of formal enforcement mechanisms for the ceasefire, combined with ongoing missile launches, cyberattacks, and drone surveillance, suggests that the geopolitical landscape remains volatile. Trump’s initial ceasefire declaration may have dampened speculation of immediate escalation, but underlying tensions remain unresolved.
Central Banks and OPEC Monitor Developments Closely
The rapid shift in oil pricing and inflation expectations is also drawing close scrutiny from central banks. With crude prices declining, central bankers are reassessing inflation forecasts. While cheaper oil could ease consumer price pressure, any flare-up in conflict could abruptly reverse that trend.
The U.S. Federal Reserve, European Central Bank (ECB), and Bank of Japan (BOJ) now face renewed uncertainty as they weigh interest rate trajectories. Fed Chair Jerome Powell is expected to address these variables during ongoing congressional testimony this week.
Meanwhile, OPEC and its allies (OPEC+) are reportedly preparing contingency strategies to manage market fluctuations. According to sources close to the group, member nations have held internal consultations on how to respond if oil prices fall below critical thresholds due to temporary oversupply or if fresh conflict emerges.
“Producers want to avoid both undersupply and oversupply traps,” explained Dr. Hamza Al-Kuwaiti, a former advisor to the Kuwaiti Oil Ministry. “With oil at $69 and volatility ahead, coordinated production discipline will be essential.”
The Road Ahead: Temporary Calm or Prelude to More Instability?
As of now, global markets are enjoying a temporary reprieve. Energy traders have pivoted toward risk appetite, betting on the durability of a U.S.-brokered ceasefire—yet most agree the situation remains highly unstable.
If the ceasefire holds, oil prices could continue to stabilize, offering relief to consumers and easing inflation pressure. But if another round of retaliatory strikes erupts, particularly involving critical infrastructure or supply chains, the market could spiral upward once again.
For now, Brent and WTI reflect cautious optimism—but volatility remains the only constant in the current Middle East crisis.
