[NEW YORK] Oil prices fell 6 per cent on Tuesday (Jun 24) to settle at a two-week low, on expectations the ceasefire between Israel and Iran will reduce the risk of oil supply disruptions in the Middle East.
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.
Brent crude futures fell US$4.34, or 6.1 per cent, to settle at US$67.14 a barrel. US West Texas Intermediate (WTI) crude fell US$4.14, or 6 per cent, to settle at US$64.37.
Settlement was the lowest for Brent since Jun 10 and WTI since Jun 5, both before Israel launched a surprise attack on key Iranian military and nuclear facilities on Jun 13.
“The geopolitical risk premium built up since the first Israeli strike on Iran almost two weeks ago has entirely vanished,” said Tamas Varga, a senior analyst at TP ICAP’s PVM Oil Associates brokerage and consulting firm.
On Monday, both oil contracts settled down more than 7 per cent. They had rallied to five-month highs after the US attacked Iran’s nuclear facilities over the weekend.
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Direct US involvement in the war had investors worried about the Strait of Hormuz, a narrow waterway between Iran and Oman, through which between 18 million and 19 million barrels per day (bpd) of crude oil and fuels flow, nearly a fifth of global consumption.
Prices also fell as Trump said China, the world’s biggest oil importer, can continue to purchase oil from Iran.
In other supply news, Kazakhstan’s state energy company KazMunayGaz raised its forecast for oil output at the Chevron-led Tengiz oilfield, the country’s largest, to 35.7 million tonnes in 2025 from 34.8 million tonnes expected previously.
Kazakhstan is a member of the Opec+ group of countries that includes the Organization of the Petroleum Exporting Countries (Opec) and allies. Several other Opec+ members have also been increasing output.
In Guyana, oil output rose to 667,000 bpd in May from 611,000 bpd in April, fuelled by increases at two of three production facilities operated by US major ExxonMobil.
US economy and oil inventories
Another factor weighing on oil prices came from US consumer confidence, which unexpectedly deteriorated in June as households increasingly worried about job availability and economic uncertainty from Trump’s tariffs.
US Federal Reserve
Bank of New York president John Williams said he expects slower growth and higher inflation this year, due in large part to trade tariffs, in comments that suggested he was in no rush to cut interest rates, which could boost economic growth and oil demand.
The American Petroleum Institute (API) trade group and the US Energy Information Administration (EIA) were due to release US oil inventory data,
Analysts forecast energy firms pulled about 0.8 million barrels of oil from US stockpiles during the week ended Jun 20.
If correct, that would be the first time energy firms pulled oil from storage for five weeks in a row since January. That compares with a build of 3.6 million barrels during the same week last year and an average decrease of 2.5 million barrels over the past five years (2020 to 2024).
The API releases its numbers on Tuesday and the EIA on Wednesday. REUTERS
