Oil fell as U.S. President Donald Trump announced a ceasefire between Iran and Israel. Brent futures plunged more than 5%, falling below $68 a barrel, as Israel said it had agreed to the move. The decline — which followed a volatile session on Monday that ended with a sharp loss — took prices below levels seen on June 12, the day before Israel attacked Iran.

Gold fell as demand for safe-haven assets declined. In a move that would lower the risk premium on crude, Trump first said that Israel and Iran had agreed to a "total ceasefire," according to a Truth Social post, then followed up by saying the agreement was "now in effect." Israel agreed to the ceasefire, Prime Minister Benjamin Netanyahu said. Iranian Foreign Minister Abbas Araghchi said his country would exercise restraint if Israeli attacks stopped.

The oil market has been rattled by the Middle East crisis over concerns that the conflict could disrupt supplies from a region that pumps about a third of the world's crude. Prices surged, then retraced gains as the standoff dragged on, with Israel, Iran and the U.S. all avoiding attacks on infrastructure and oil-related vessels continuing to pass through the Strait of Hormuz with only minor disruptions.

"Traders are now very confident that the risk of a supply shock is now well and truly behind us," said Chris Weston, head of research at Pepperstone Group Ltd. "The prospect of a prolonged conflict with U.S. involvement has been re-priced, giving the green light to add risk."

In a sign of easing tensions, Brent's prompt spread — the difference between its two nearest contracts — narrowed to 82 cents a barrel in backwardation. While that's still a bullish pattern, with near-term prices above those farther out, it's down from last week's closing peak of $1.77 a barrel. The main December-December spread fell back into contango, the opposite, bearish pricing structure.

In the broader energy market, European natural gas prices fell as much as 13% at the open, as concerns faded that disruptions in Hormuz — the conduit for 20% of seaborne gas shipments. Meanwhile, US LNG exports rose after maintenance, which will add to the market. (alg)

Source: Bloomberg