Israel and Iran agree to a ceasefire. How did energy markets respond?

Oil prices dropped sharply after US President Donald Trump announced a ceasefire between Israel and Iran (although it was soon broken), which alleviated concerns about disruptions in the supply of “black gold” from the primary oil-producing region. Brent and WTI futures fell by $2 on Tuesday to $69.4 and $66.5 per barrel, respectively.

What is known now is that on Monday June 23, Trump announced that Israel and Iran had agreed to a ceasefire. If the ceasefire holds, investors may expect oil prices to return to normal levels, analysts said.

The US president also called on energy producers to maintain low oil prices and for the US Department of Energy to increase oil production soon. However, in recent years American oil companies have shown little interest in sharply increasing production, as the price of WTI oil has been lower than the cost of production in some fields.

Additionally, amid news of a truce between Israel and Iran, natural gas prices in the EU on Tuesday plummeted nearly 12% to €35.75 per MWh, or $436.15 per 1,000 cubic meters.