Oil prices fell sharply on Tuesday after Israel and Iran agreed to a ceasefire proposal brokered by the United States, easing concerns over potential supply disruptions in the Middle East.
Brent crude oil, against which Nigerian crude oil is priced, dropped $3.82 or 5.3% to $67.66 a barrel as of 07:45 a.m. in Nigeria while U.S. West Texas Intermediate (WTI) crude declined by $3.75 or 5.5% to $64.76 per barrel.
The sell-off follows a broader retreat from five-month highs recorded last week amid escalating tensions in the region.
The sharp reversal in prices was triggered after Israeli Prime Minister Benjamin Netanyahu confirmed Israel’s acceptance of U.S. President Donald Trump’s ceasefire plan.
In a statement released by Netanyahu’s office, he stated that Israel had achieved its objective of neutralizing Iran’s nuclear and ballistic missile capabilities.
President Trump had announced on Monday that both parties agreed to a phased ceasefire with Iran initiating the truce immediately followed by Israel 12 hours later. If maintained, the ceasefire will culminate in a formal end to the 12-day conflict within 24 hours.
The de-escalation effectively removes a major geopolitical risk premium that had supported crude oil’s recent rally.
“With the ceasefire news, we are now seeing a continuation of the risk premium built into crude oil prices last week all but evaporate,” said Tony Sycamore, analyst at IG.
Prior to the truce, investor focus was directed at the Strait of Hormuz — a key maritime chokepoint where nearly one-fifth of the world’s oil supply passes. The U.S. airstrike on Iran’s nuclear infrastructure over the weekend had intensified fears that the conflict would escalate and trigger a disruption in global oil flows.
“The extent to which Israel and Iran adhere to the recently announced ceasefire conditions will play a significant role in determining oil prices,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Iran, the third-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), is expected to increase export capacity if the ceasefire holds, further pressuring prices in the near term.
Market participants are now recalibrating their expectations.
“Technically, the overnight sell-off reinforces a layer of resistance between approximately $78.40 and $80.77. It’s clear that it will take something extremely unexpected and detrimental to supply for crude oil to break through this resistance zone,” Sycamore added.
Both Brent and WTI crude had settled over 7% lower in the previous session after surging on war-related speculation. The easing of tensions and the commitment to peace has now reintroduced a degree of stability, prompting traders to reassess immediate upside risks.
Despite the current decline, analysts caution that oil markets remain sensitive to geopolitical developments, particularly in the Gulf region. Any breach of the ceasefire or new military escalation could trigger renewed volatility.
