Oil drops to seven-week low after Iran Israel ceasefire
Oil prices fell to their lowest level in seven weeks after Iran and Israel announced a halt to their mutual attacks, easing fears of a wider regional disruption to energy supplies. The decline erased earlier gains triggered by renewed hostilities between the two sides, which had briefly pushed crude higher on concerns over supply risks in the Middle East.
Brent crude fell more than 3 percent as markets reacted to the de-escalation. The move followed days of volatility driven by direct exchanges of fire between Iran and Israel, including missile strikes and retaliatory attacks linked to military positions in the region. The ceasefire announcement came after diplomatic pressure from the United States, even as isolated military activity continued in parallel, keeping geopolitical risk on the table for traders.
Additional pressure came from weakening demand signals in Asia. China’s crude imports dropped sharply in May to an eight-year low, reflecting softer industrial activity and slower consumption growth. At the same time, energy agencies revised global outlooks for both supply and demand, pointing to a more balanced but less dynamic oil market heading into 2026.
Industrial metals also came under pressure as expectations of tighter US monetary policy weighed on growth-sensitive assets. Aluminium prices declined, reversing earlier gains accumulated during months of supply disruptions tied to regional conflict. Market participants increasingly priced in the possibility that strong US labor data could delay or reverse interest rate cuts, reducing demand prospects for industrial inputs.
Inflation trends and central bank signals added another layer of uncertainty. Persistent price pressures in the US economy have revived debate over further monetary tightening, with markets adjusting expectations for policy moves later in the year. Traders are now balancing reduced geopolitical risk against a potentially more restrictive financial environment, leaving commodity markets caught between opposing forces.
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