Oil prices have given back some of their earlier gains. Following a day of cross-border exchanges, Iranian media reported that the country's armed forces announced the conclusion of military operations against Israel.
The global benchmark, Brent crude, rose by approximately 1.4%, having earlier surged as much as 5.4%. According to Iran's semi-official Fars News Agency, Iran's central military command stated that the military action against Israel has ended. The statement simultaneously warned that if Israel continues its attacks, including military operations in southern Lebanon, "a more severe and devastating response will follow."
Previously, the U.S. President posted on Truth Social that, following reciprocal attacks, the two nations were seeking an immediate ceasefire agreement. He also stated that a peace deal "is moving forward, provided it is not derailed by ignorance or stupidity."
Israel had earlier stated that it struck military targets within Iran in retaliation for Tehran's earlier missile attack. Prior to this, the U.S. President had urged the Israeli Prime Minister not to carry out retaliatory strikes.
Despite the U.S. President's calls for both sides to cease hostilities to create a successful opportunity for peace negotiations, Israel and Iran exchanged missile attacks.
Despite the day's significant price increase, oil remains below $100 per barrel, indicating the market has successfully avoided the worst impacts from what the International Energy Agency called the largest supply disruption in history. At the peak intensity of this conflict, the global benchmark oil price neared $130 per barrel.
Yemen's Houthi group stated it would impose a comprehensive shipping ban on Israeli vessels in the Red Sea. However, a major industry body believes the practical impact on shipping will not be significantly different, as many vessels are already avoiding that route.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated, "Despite repeated optimistic signals from the U.S. administration, achieving a lasting peace agreement seems increasingly difficult. The lack of progress in normalizing energy supplies from the Middle East is reinforcing market expectations that oil prices will remain elevated for an extended period."
Over the past week, renewed escalation in the Middle East conflict not only risks shattering any ceasefire but also complicates negotiations to end the war. This conflict has led to the near-closure of the critical Strait of Hormuz, cutting off a major portion of the crude oil, fuel, and natural gas supplies needed by global customers.
The U.S. Central Command stated over the weekend that it had shot down two Iranian attack drones that were threatening international maritime traffic in the Strait of Hormuz. This followed Iran's launch of six ballistic missiles towards Bahrain and Kuwait on Friday. Those missiles were intercepted, while U.S. forces struck Iranian coastal surveillance radar stations.
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