Oil prices rebound slightly as markets eye fragile Iran-Israel ceasefire

Oil prices inched higher on June 25 after two days of sharp declines, as markets assessed the durability of a ceasefire between Iran and Israel and the broader implications for global crude supply. Brent crude futures rose by 75 cents, or 1.1 per cent, to $67.89 a barrel, while US West Texas Intermediate (WTI) crude gained 71 cents, or 1.1 per cent, to $65.08. The fragile truce between Iran and Israel, brokered by US President Donald Trump, brought a temporary pause to hostilities following nearly two weeks of conflict that had briefly spiked oil prices to five-month highs.

The uptick follows a steep fall earlier in the week, when Brent settled at its lowest level since June 10 and WTI since June 5—dates that predated Israel’s surprise attack on Iran on June 13. Oil markets had surged briefly after the US joined the conflict with targeted strikes on three nuclear facilities in Iran over the weekend. However, investor fears of a wider supply disruption quickly eased after the announcement of a ceasefire.

Oil outlook hangs on the thread of hope

Though the US strikes were intended to curb Iran’s nuclear capabilities, a preliminary intelligence assessment suggested the facilities would only be set back by a few months. Still, both Tehran and Tel Aviv have since signalled a halt to direct air assaults, raising hopes for a period of calm.

Despite this, tensions remain high in the region. Violations of the ceasefire have been reported, prompting the White House to issue renewed calls for restraint. Of particular concern to investors is the Strait of Hormuz—a narrow waterway between Iran and Oman through which nearly 20 per cent of global crude and fuel flows. Any disruption there could have major implications for global energy security.

India, which relies on imports for over 85 per cent of its crude requirements—36 per cent of which passes through the Strait—welcomed the de-escalation. The Ministry of External Affairs called for diplomacy and dialogue, offering to support efforts to ensure lasting peace.

Data from the American Petroleum Institute (API) on June 24 showed that US inventories shrank nearly 4.3 million barrels in the previous week (ended June 20), beating the expectations for a draw of 0.6 million barrels. Outsized draws in US inventories helped spur some confidence in fuel demand, which was seen picking up sharply with the summer season.

This follows a 10.1 million barrel draw from the week before, pointing to quickly tightening US oil stockpiles. The API data usually heralds a similar trend from official inventory data, which is due later on today (June 25).