Oil futures fell sharply on Tuesday as a freshly announced Iran-Israel ceasefire began to allay investor concerns over supply and shipping disruptions in the oil-rich Middle East.

The Ice Brent contract with August expiry was trading at $69.76 per barrel at 09:09 a.m. London time, down 2.41% from the previous session. The front-month August Nymex WTI contract was at $66.85 per barrel, 2.42% lower from the Monday settlement.

Oil prices had added roughly 10% over the mid-June start of Iran-Israel hostilities that were exacerbated in recent days by U.S.’ direct military involvement and Iran’s retaliatory strike against an American base in Qatar. Crude futures eased following U.S. President Donald Trump’s overnight announcement of an Iran-Israel ceasefire despite lingering questions over implementation and the future of Tehran’s nuclear program — the key cause of the recent hostilities cited by Israel and the U.S.

At risk throughout the offensives were supply in both Iran — which produced 3.3 million barrels per day in May, according to OPEC’s monthly oil market report released in June, which cites independent analyst sources — and the broader Middle East region, if the conflict spilled over.

Throughout the hostilities, investors also watched whether Iran would proceed with closing the Strait of Hormuz linking the Persian Gulf and the Gulf of Oman — a key route for Iranian and other Middle Eastern shipments, including those of the world’s largest crude exporter Saudi Arabia, and the United Arab Emirates, Iraq, Kuwait and Bahrain.

Iran’s parliament on Sunday approved the closure of the Strait of Hormuz, according to a report from Iran’s state-owned Press TV that CNBC could not independently verify, though a final decision rested with the country’s national security council.

“The potential closure of Strait of Hormuz remains a tail risk in our view, but we maintain that oil prices would race past $100/b in such a scenario, due to limited avenues to bypass the narrow passage and the constraints it would pose to the marketability of spare capacity,” Barclays analysts said in a Tuesday note, just as Trump announced a tentative ceasefire.

They further added that oil prices came under pressure “as the threat of wider regional conflagration did not materialize despite the US action against Iranian nuclear sites.”

Amid risk to supply, the International Energy Agency previously reassured it had 1.2 billion barrels of emergency stockpiles it could resort to. As part of a strategy decided prior to the Iran-Israel escalations, some producers from the influential OPEC+ alliance have also been raising output and have additional spare volumes that could be brought online.

It’s a strange thought that launching attacks on other countries could lead to peace, but that seems to be the logic behind the abrupt escalation in conflict in the Middle East beginning Saturday. And now there’s a confusing ceasefire.

“Very confusing! Does Israel have 12 more hours to strike based on his [Trump’s] first announcement? Or are they supposed to be in ceasefire now? Even after the deaths in Beersheva and Iran’s barrage after the deadline? No one knows!” Dan Shapiro, former U.S. ambassador to Israel, posted on X.

Here’s a quick recap.  

On Saturday, U.S. President Donald Trump authorized air strikes on Iranian nuclear sites, pushing America into Israel’s war with Tehran.

On Sunday, Iran’s Foreign Minister Abbas Araghchi said Tehran “reserves all options to defend its sovereignty, interest, and people.”

On Monday, Iran launched a retaliatory strike against America, targeting a U.S. military base in Qatar. Later that evening stateside, Trump announced a ceasefire.

On Tuesday, Iran’s Foreign Minister Foreign Minister Seyed Abbas Araghchi denied that the country had agreed to a ceasefire — but said Iran was open to halting its military operations if Israel, which has yet to respond publicly to Trump’s statement, stopped its “aggression against the Iranian people.”

Trump, on Tuesday morning stateside, declared the ceasefire was in effect.

While Iran continued striking Israel on Tuesday morning local time, Tehran’s state-aligned media reported them as “the last round of Iranian missile attacks … before the ceasefire began.” CNBC, however, was unable to independently verify the claim.

Iran also gave the U.S. “early notice” of its attack on the military base in Qatar, according to Trump. It was a “retaliation that was expected,” Republican House Speaker Mike Johnson said. Qatar also received advanced warning from Iran, according to The New York Times, which cited three Iranian officials familiar with the matter.

This, essentially, is “the peace through strength strategy,” Helima Croft, head of global commodity strategy at RBC Capital Markets, told CNBC.

In other words, there’s a small chance tensions in the Middle East might truly cool down following a carefully calibrated and symbolic exchange of strikes that projects strength from all parties, while also providing Iran an off-ramp to de-escalate tension.

Judging by stock markets worldwide and oil prices — which rose and fell, respectively — investors are indeed hopeful this missiles-led peace will likely stay.

Iran says it’s prepared to stop attacks
Trump said early Tuesday morning stateside that the ceasefire between Israel and Iran — which he had announced Monday evening — was “now in effect.” Iran’s Foreign Minister Seyed Abbas Araghchi had earlier said there was “NO ‘agreement’ on any ceasefire or cessation of military operations,” but signaled that Tehran had “no intention” to continue armed conflict. Israel has not publicly confirmed that they have accepted Trump’s ceasefire timeline.

Iran strikes Israel and U.S. military base in Qatar
Iran on Tuesday fired a “final round” of missiles at Israel before the 12 a.m. ET ceasefire with Israel came into effect, Iranian state-aligned media announced Tuesday. CNBC was unable to independently verify the claim. On Monday, Iran launched an airstrike on United States’ Al-Udeid military base in Qatar, the largest American military installation in the Middle East, with around 10,000 service members.

Prices of oil post a huge drop
Oil prices fell sharply Tuesday during Asia hours on news that Iran was prepared to halt military operations. As of 1:30 p.m. Singapore time, U.S. crude oil was down 3.04% at $66.43 per barrel, while Brent had shed 2.99% to $69.34, with both benchmarks adding to the previous day’s losses of more than 7%. Trump on Monday demanded that “everyone” keep oil prices down or they would play “into the hands of the enemy.” Trump didn’t specify who he was referring to, but he seemed to be addressing U.S. oil producers.

Markets in U.S. rise on de-escalation hopes
U.S. stocks rose Monday as investors seemed hopeful of de-escalation in the Israel-Iran war. The S&P 500 climbed 0.96%, the Dow Jones Industrial Average added 0.89% and the Nasdaq Composite gained 0.94%. Tesla shares popped 8.2% after the company launched its robotaxis in Austin, Texas, on Sunday — but regulators are looking into reports of robotaxis driving erratically. Asia-Pacific markets climbed Tuesday, with South Korea’s Kospi index jumping 2.73% at 2:40 p.m. local time.

[PRO] Wall Street’s thoughts on robotaxis
Wall Street closely watched Tesla’s robotaxi launch in Texas over the weekend. Analyst outlooks on the event vary widely. While Wedbush’s Dan Ives, who rode in the robotaxis over the weekend, said it “exceeded our expectations,” Guggenheim’s Ronald Jewsikow called the event “baby steps.” Here’s what analysts think about what the robotaxis mean for Tesla’s stock.

Airlines divert, cancel more Middle East flights after Iran attacks U.S. military base

Airlines diverted more Middle East flights on Monday after Iran’s armed forces said the country launched a missile strike on a U.S. military base in Qatar, as the region’s military conflict continued to disrupt airlines’ operations.

Dubai-based Emirates said that some of its aircraft rerouted on Monday and told customers that delays or longer flights were possible as it would take “flight paths well distanced from conflict areas,” while operating its schedule as planned.

Air India said it had halted all flights in and out of the region and to and from the east coast of North America and Europe “until further notice.”

Earlier, major international airlines including Air France, Iberia, Finnair and others announced they would pause or further postpone a resumption of service to some destinations in the Middle East.