Brent crude falls below $94 as Iran-Israel ceasefire holds

Iran and Israel halted strikes Monday, heeding Trump's call for an immediate ceasefire and sending Brent crude below $94 a barrel as traders unwound geopolitical risk premiums built up over weeks of escalating conflict.

"The speed of the price reversal reflects how much of the recent rally was purely geopolitical premium," said Omar Tariq, oil and gas analyst at Edgen. "But with the Strait of Hormuz still effectively closed and negotiations ongoing, the supply risk hasn't fully disappeared."

Brent crude for August delivery settled at $94.25 a barrel Monday, down from an intraday high of $95.50 after Iran's Islamic Revolutionary Guard Corps launched missiles at Israel on Sunday — the first such attack since the April ceasefire. West Texas Intermediate fell to $91.40, paring earlier gains of as much as 2.5%. The S&P 500 rose 0.3% and the Nasdaq gained 0.9% as tech stocks rebounded from Friday's selloff, while the 10-year Treasury yield edged up to 4.56%. Bitcoin recovered to about $63,500 after falling below $60,000 on Friday for the first time since October 2024.

The ceasefire's durability will determine whether oil prices can sustain their retreat. The April 17 truce has been violated repeatedly by both sides, and Iran's IRGC warned Sunday's strikes were the start of "a full week" of attacks. Trump said on Truth Social that both countries are "looking to do an immediate CEASEFIRE" and that a "Final Deal" is being negotiated, but the Strait of Hormuz — through which about a fifth of the world's oil flows — remains under blockade. Every $1 sustained increase in crude prices raises India's annual import bill by about ₹18,000 crore, according to the country's petroleum ministry, showing the global economic stakes.

Strait of Hormuz Blockade Keeps Supply Risk Alive

Iran moved to close the Strait of Hormuz after US-Israeli strikes on Iran began Feb. 28, disrupting shipments of oil, fertilizer and other resources. While the ceasefire halts direct military exchanges, Trump said the "Blockade will remain in place, and in full force and effect, until a 'Final Deal' is reached."

The blockade has already pushed up costs across the economy. Campbell's Co. CFO Todd Confer said Monday that the conflict will add 2 to 3 percentage points to the company's inflation in fiscal 2027, on top of an already expected 3% rate. "It's just not oil directly, but it's everything that oil gets into products, whether it's packaging, whether it's logistics," he said on the company's earnings call.

In India, which imports nearly 90% of its crude oil requirements, state-run oil marketing companies are losing about ₹6 per litre on petrol and ₹30 per litre on diesel, according to Praveen Khanooja, additional secretary in the ministry of petroleum and natural gas. The daily cumulative under-recovery, including losses on liquefied petroleum gas sales, stands at ₹600 crore to ₹700 crore.

Ceasefire Test Looms as Negotiations Continue

The last time Iran and Israel exchanged direct fire was in April, when a ceasefire brokered by the US ended weeks of fighting that began after coordinated US-Israeli strikes on Iran on Feb. 28. That truce held for about two months before Sunday's missile attack, raising questions about whether the latest pause will prove more durable.

Trump said the US could declare "total victory" over Iran within two weeks, according to a CNN report. "We're negotiating now, and they want to make a very good deal," he said. "They're willing to give us everything, they're willing to give us no nuclear weapon." If a final deal is reached, oil prices "will come tumbling down," he added.

This article is for informational purposes only and does not constitute investment advice.