Oil prices fell sharply on Tuesday, with Brent crude settling down $4.34, or 6.1%, at $67.14 a barrel and U.S. West Texas Intermediate (WTI) falling $4.14, or 6.0%, to $64.37. Both benchmarks hit their lowest closing levels in two weeks, as markets reacted to the announcement of a ceasefire between Israel and Iran, easing concerns of supply disruptions from the region.
The ceasefire, though fragile, prompted a retreat of the geopolitical risk premium built up since Israel’s June 13 strike on Iran. Tamas Varga of PVM Oil Associates noted that the entire premium had “vanished.” The drop follows Monday’s more than 7% plunge in both contracts after Iran’s limited retaliation on a U.S. base in Qatar was viewed as de-escalatory.
Further pressure on prices came as U.S. President Donald Trump accused both sides of violating the ceasefire and signaled that China may continue buying Iranian oil. Additionally, new output gains from Kazakhstan and Guyana added to global supply worries. Kazakhstan raised its 2025 forecast at the Tengiz oilfield, while Guyana’s May production rose to 667,000 barrels per day, up from April’s 611,000.
On the economic front, deteriorating U.S. consumer confidence and comments from Fed officials warning of slower growth and higher inflation from tariffs also weighed on oil. Lower economic sentiment raises concerns about future demand. The market also awaited U.S. oil inventory data, with analysts expecting a 0.8 million barrel draw—the fifth straight weekly decline if confirmed.