• WTI crude futures drop 3.03% to below $101/BBL as US-Iran ceasefire hopes rise.
  • The fragile truce and potential nuclear deal ease supply fears, but markets remain on edge.
  • Prices had surged nearly 60% since the war began, with volatility expected to continue.

Oil Tumbles on Ceasefire Optimism

WTI crude futures fell below $101 per barrel on Tuesday, shedding 3.03% intraday, as market participants grew hopeful that a fragile US-Iran ceasefire could lead to lasting peace. The decline trimmed weekly gains after oil prices had surged nearly 60% since the conflict began on February 28, 2026. Earlier this month, prices peaked above $107/BBL on April 28.

The US has received an updated peace proposal from Iran, with President Trump stating that progress has been made, though he expressed uncertainty about reaching a final agreement. The fragile ceasefire, reached three weeks ago, has "terminated" hostilities according to the Trump administration. However, the US maintains its naval blockade on Iran until a nuclear deal is agreed upon, keeping the Strait of Hormuz—through which roughly 20% of global oil flows—effectively shut.

Market Relief Tempered by Risks

"The dip reflects market relief from de-escalation hopes, but underlying geopolitical risks remain significant," a commodity trader said. The International Energy Agency recently warned of a potential unprecedented supply shock alongside global demand slowdown risks. Recent US data showed sharp declines in crude and fuel stockpiles, with exports surging to record highs above 6 million barrels per day. Meanwhile, OPEC dynamics have been shaken by the United Arab Emirates' exit from the cartel.

Despite the intraday drop, oil prices remain up over 19% in the past month and 67.89% higher than a year ago. The market remains vulnerable to "headline risks" from any setback in negotiations. President Trump faces a 60-day War Powers Act deadline over military action in Iran, adding urgency to the talks.

Winners and Losers

Lower oil prices are a boon for consumers and energy-intensive industries like transportation and manufacturing, but they hurt energy producers and oil-dependent economies. The volatility also complicates global inflation expectations, particularly for importing nations.

Correction: A previous version of this article misstated the percentage decline as 3.03% annualized; it is intraday.