Global crude oil prices dropped sharply in late June following a surprise ceasefire between Iran and Israel. According to the Central Bank of Sri Lanka, Brent and WTI prices fell by more than $10 per barrel, bringing relief to importers and potentially signaling lower fuel costs ahead. Here’s how geopolitical peace reshaped the energy market overnight.
Iran-Israel Ceasefire Sends Crude Oil Prices Tumbling, Says Central Bank of Sri Lanka
In a dramatic shift that could have far-reaching effects on the global economy, crude oil prices dropped sharply at the end of June, following the ceasefire agreement between Iran and Israel. The Central Bank of Sri Lanka has confirmed this trend in its latest report, highlighting the significant impact of geopolitical developments on global oil markets.
According to the report, Brent crude oil, which stood at US$ 78.60 per barrel on June 23, plummeted by US$ 10.50 to US$ 68.10 by June 27, shortly after the ceasefire was announced.
Similarly, WTI (West Texas Intermediate) crude oil saw a substantial drop, falling from US$ 75.45 to US$ 65.62, marking a decline of US$ 9.83 per barrel within just four days.
The Central Bank attributes this rapid decline to easing tensions and reduced uncertainty over potential disruptions in oil supply that had stemmed from escalating conflict between Iran and Israel earlier in the month. Fears of a larger Middle East conflict had previously driven prices higher due to concerns over supply interruptions.
“The ceasefire agreement reduced the geopolitical risk premium, easing fears of a major supply disruption in global crude oil markets,” the report stated.
This price drop could offer potential relief for oil-importing countries like Sri Lanka, which have been grappling with high energy costs. Lower crude prices may pave the way for reductions in domestic fuel prices, help curb inflation, and ease pressure on trade balances.
Analysts suggest that the oil market remains highly sensitive to geopolitical developments, and while the Iran-Israel ceasefire has brought temporary stability, any renewed tensions could reverse the trend.
The Central Bank’s report underscores the interconnectedness of global energy markets and political stability, with even short-term diplomatic breakthroughs having immediate effects on global commodities.
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