Oil Prices Plunge Below Pre-Conflict Levels as Iran-Israel Ceasefire Calms Market Fears

A view of the Tehran Oil Refinery (Rey Oil Refinery) in Tehran, Iran. This key infrastructure is a vital component of the nation’s oil production. (Getty Images)

Oil Prices Plunge Below Pre-Conflict Levels as Iran-Israel Ceasefire Calms Market Fears

By Thenationweek.com

June 27, 2025

MANILA, Philippines – Global oil markets experienced a dramatic reversal this week, erasing conflict-driven gains and tumbling below pre-escalation levels as a fragile ceasefire between Iran and Israel eased concerns about supply disruptions.

Brent crude, the international benchmark, plummeted 6.1 percent to $67.14 a barrel, while West Texas Intermediate (WTI), the US benchmark, mirrored the decline, falling 6 percent to $64.37 a barrel.

The prices effectively rewind the market to levels observed before Israel’s June 13th strike on Iranian nuclear facilities, an event that ignited a tense 12-day conflict marked by missile exchanges and US military involvement.

The sharp price correction reflects a significant shift in investors’ sentiment following President Donald Trump’s Monday announcement of a ceasefire.

While initial accusations of violations from Israel, subsequently denied by Iran, briefly threatened the agreement, the ceasefire appeared to hold as of Tuesday afternoon, injecting optimism into global markets.

The news triggered a broad rally across global equities. In the US, the Dow Jones Industrial Average surged 1.19 percent, adding 507 points.

The S&P 500 climbed 1.11 percent, and the tech-heavy Nasdaq Composite advanced 1.43 percent, inching closer to record highs.

The CBOE Volatility Index, Wall Street’s closely watched “fear gauge,” dropped 12 percent, signaling a return to stability.

Asian and European markets also closed in positive territory.

“There could be hiccups along the way, but the market is signaling that this conflict is likely over,” declared Robert Yawger, commodities specialist at Mizuho Securities.

However, analysts are urging caution, emphasizing the potential for renewed volatility.

“Markets breathed a sigh of relief following Trump’s ceasefire declaration, but the celebration could be short-lived,” warned Lukman Otunuga, senior market analyst at FXTM. “If tensions flare again or the ceasefire is violated, we could see a swift return to risk aversion — boosting safe havens like gold and pressuring global equities.”

Strait of Hormuz Concerns Ease

The primary catalyst for the oil price decline is the diminished threat of disruption to global oil supplies. The conflict had stoked fears that Iran might close the Strait of Hormuz, a critical chokepoint through which approximately a quarter of the world’s oil transits, according to the International Energy Agency.

Goldman Sachs had previously estimated that oil prices could skyrocket past $100 a barrel in the event of a prolonged disruption to traffic through the strait.

Assuming the ceasefire holds, analysts anticipate a period of relative price stability. “Brent crude could hover near the $70 per barrel level while clarity on a US-Iran deal emerges,” predicted Mukesh Sahdev, global head of commodity markets at Rystad Energy. “The prospect of severe economic fallout from a potential blockade [of the strait] likely motivated both sides to agree to the ceasefire, if it is indeed genuine.”

The recent volatility in oil prices vividly illustrates the market’s acute sensitivity to geopolitical events. Prices initially surged following the conflict’s outbreak, reaching a five-month high last week, only to plummet on Monday after Iran launched targeted missile strikes on U.S. bases in Qatar. U.S. crude tumbled 7.2% to settle at $68.51 a barrel, marking its biggest single-day drop since early April. Brent closed at $71.48 a barrel, down 7.2%, the steepest decline since August 2022.

The Philippines, heavily reliant on imported oil, is expected to see a corresponding decrease in fuel prices at the pump, offering some relief to consumers and businesses.