Ceasefire Hopes Fade: Oil Prices Pare Back Losses

Initial hopes for a lasting ceasefire between Israel and Iran began to fade, leading oil prices to pare back significant losses after an earlier sharp decline. Brent crude, the international benchmark, initially reacted with a substantial drop following the ceasefire announcement, reflecting optimism for de-escalation.
However, reports of renewed hostilities quickly eroded this optimism. Israel’s military reported detecting further Iranian missile barrages, directly contradicting the ceasefire declaration and prompting a swift rebound in oil prices. This indicates the market’s deep skepticism about the truce’s immediate effectiveness.
The “war premium” that had been priced into oil due to Middle East tensions is now in the process of being unwound. However, the quick recovery of prices suggests that traders remain highly vigilant to any signs of renewed conflict, which could quickly push prices higher again.
Stock markets globally, including the FTSE 100, saw a generally positive response to the initial ceasefire news, with travel and airline stocks performing particularly well. This suggests a broader market relief, even as the oil market grapples with the nuanced realities of a fragile truce.