Oil prices tumbled by nearly 5% on Tuesday after Israel agreed to a ceasefire with Iran after nearly two weeks of conflict.
Brent crude, the international benchmark for oil prices, fell to $68 a barrel, which is below the level it was at when Israel launched missiles against Iran’s nuclear sites on 13 June.
Prices had spiked in recent days as concerns grew that Iran could disrupt global supplies by blockading the Strait of Hormuz, a key shipping route for oil and gas.
Stock markets in Asia rose as US President Donald Trump declared the ceasefire “is now in effect”, after which Israel confirmed that it had agreed to the move.
Oil prices have soared to as much as $81 a barrel since the missile strikes began, stoking fears that the cost of living could increase as petrol, diesel and business expenses grew.
“If the ceasefire is followed as announced, investors might expect the return to normalcy in oil,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
But she added that “the extent to which Israel and Iran adhere to the recently announced ceasefire conditions will play a significant role in determining oil prices”.
Japan’s Nikkei share index rose by 1.1% while Hong Kong’s Hang Seng increased by 2.1%.