After Iran's retaliatory attacks against the United States remained at a limited level and reports of a ceasefire between Israel and Iran surfaced, international oil prices plummeted. This likely reflects expectations that the Strait of Hormuz, a key oil shipping route, will not be blocked.
On the 23rd (Eastern Time), West Texas Intermediate (WTI) crude oil futures in the New York Mercantile Exchange closed at $68.51 per barrel, a decrease of 7.2% compared to the previous day. Subsequently, the Brent crude futures in the London Intercontinental Exchange also fell sharply by 7.2%, recording $71.48 per barrel.
Last weekend, as the United States joined in the attack on Iranian nuclear facilities, international oil prices surged above $80 per barrel, but fell by more than $10 overnight. As of 10:30 a.m. Korean time, the WTI futures price stood around $66, while Brent crude was trading around $68.
International oil prices were moving at around $65 per barrel before Israel attacked Iran on the 13th, thus returning to previous levels. It seems to reflect the atmosphere that military conflicts across the Middle East will not escalate as the United States and Iran exchanged coordinated attacks.
President Trump expressed gratitude on social media toward Iran, which 'notified us in advance' after the Iranian countermeasures. He also announced that Israel and Iran had agreed to a ceasefire.
Concerns that Iran would block the Strait of Hormuz have also been alleviated. This strait is a narrow waterway connecting the Persian Gulf and the Gulf of Oman in the Middle East. About 25% of the world’s crude oil consumption and around 20% of liquefied natural gas (LNG) consumption pass through this area. Even just slowing down ships passing through the strait can affect oil prices and shipping rates.