Oil prices inched upward on Wednesday as markets evaluated the stability of a potential ceasefire between Iran and Israel. Simultaneously, Asian stocks held steady, while the dollar dipped 0.1% to 144.70 against the Yen.
Brent crude rose 1.3% to $67.99 per barrel by 03:41 GMT, and U.S. West Texas Intermediate increased 1.4% to $65.24. Both benchmarks remained slightly above the multi-week lows seen on Tuesday.
Prices had surged to five-month highs over the weekend following U.S. airstrikes on Iran’s nuclear assets but cooled as the ceasefire was implemented.
“Oil prices are dropping internationally following the truce between Iran and Israel. Our oil analysts still base forecasts on supply fundamentals, which suggest ample global availability,” stated JP Morgan experts in a client update.
In contrast to President Trump’s earlier assertion that the program had been “obliterated,” a preliminary assessment by U.S. intelligence revealed that the assaults only caused a temporary delay of several months in Iran’s nuclear capabilities.
On Tuesday, both Israeli and Iranian officials indicated an end to the direct conflict after nearly two weeks of rising tensions. Civilian restrictions were lifted on both sides, with each government claiming victory in a confrontation that had initially posed a threat to the global oil supply.
“The truce between Iran and Israel appears delicate,” commented David Oxley, chief climate and commodities economist at Capital Economics. “However, as long as energy export routes and shipping through the Strait of Hormuz remain undisturbed, we expect bearish oil market fundamentals to persist.”
The Strait of Hormuz, a vital passage between Oman and Iran, continues to be a critical area of focus. Approximately 18 to 19 million barrels of gasoline and oil pass via this route every day, making up 20% of the global oil flow.
Japan’s Nikkei and Australia’s S&P/ASX 200 remained unchanged, while Taiwan’s TAIEX advanced 1%. Hong Kong’s Hang Seng edged up 0.6%, whereas China’s CSI 300 slipped 0.1%. U.S. stock futures were largely unmoved.
Movements in the currency and bond markets signaled reduced concern over inflation driven by oil prices. The U.S. two-year Treasury yield declined to 3.787%, marking its lowest point since May 8, while the dollar index edged down 0.1% to 97.854.
The dollar dropped 0.1% against the yen to 144.70, and the euro appreciated 0.1% to $1.1625, nearing Tuesday’s high of $1.1641—its strongest showing since October 2021.
Federal Reserve Chair Jerome Powell cautioned on Tuesday that increasing tariffs might fuel inflation in the coming summer months, during his testimony to the House Financial Services Committee.
Separately, a report indicated an unexpected dip in U.S. consumer confidence for June, suggesting a potential slowdown in the labour market.
Based on the CME FedWatch Tool, traders are currently pricing in an approximately 18% chance of a Federal Reserve rate cut in July.
