Oil prices such as United States Brent Oil Fund (NYSE:BNO) and the United States Oil Fund (NYSE:USO) are trading lower Tuesday. The selloff follows news that a tentative ceasefire between Israel and Iran may be in effect, reducing immediate concerns over further military escalation in the oil-rich Middle East region.
What To Know: President Donald Trump announced the ceasefire on Truth Social, claiming that both sides had agreed to a phased halt in hostilities. Iran's foreign ministry pushed back against the assertion but indicated it would stop operations if Israel ceased its attacks. Despite mixed signals, markets responded positively to the prospect of reduced conflict, with Brent crude dropping over 12% from its recent peak.
The sudden decline in oil prices potentially reflects investor reassessment of global supply risks. Over the weekend, U.S. B-2 bombers struck multiple Iranian nuclear facilities, sparking fears of broader regional disruption. However, as tensions began to cool, the likelihood of major oil flow interruptions through the Strait of Hormuz, a critical shipping lane, also diminished.
Trump administration officials had reportedly discussed contingency plans, including possible emergency releases from the U.S. Strategic Petroleum Reserve, but those measures may not be necessary if the ceasefire holds. Still, uncertainty lingers, with Israel accusing Iran of breaking the truce and launching missiles Tuesday, prompting further Israeli strikes.
The overall impact has led to volatility across energy markets. Brent crude futures fell to around $68 per barrel and energy-focused ETFs have broadly declined. Analysts remain cautious, citing the fragile nature of the ceasefire and the potential for renewed clashes in a region that supplies nearly one-third of the world's oil.
Price Action: United States Brent Oil shares were down 5.33% at $29.02 and United States Oil shares were down at 5.23% at $71.39 at the time of writing, according to Benzinga Pro.
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