Markets react to halt in attacks: Brent crude falls below $90 a barrel

Oil prices extended their decline in the afternoon, with North Sea Brent crude falling below USD 90 a barrel. Iran and Israel halted their attacks on each other following a call by US President Donald Trump, although both sides warned they could resume hostilities, Reuters reported.

At around 18:20 CEST, North Sea Brent crude was down 4.6 percent at USD 89.88 a barrel. US light crude West Texas Intermediate (WTI) was down around 5.4 percent at USD 86.40 a barrel.

Prices rose by as much as five percent on Monday after renewed Israeli attacks on Iran and in Lebanon dimmed hopes of an immediate, peaceful end to the war in the Middle East. Oil later gave up some of its gains after Tehran announced the end of its military operations against Israel.

"Although there has been some relief since the latest suspension of direct strikes, investors are not convinced the ceasefire will hold," said Tim Waterer, an analyst at KCM Trade.

"The key question is whether current efforts to de-escalate can finally lead to a longer-term solution, or whether we are seeing just another temporary lull," he added.

Iran and Israel said they had halted attacks on each other following President Trump’s call for an immediate ceasefire. Tehran nevertheless said it would resume strikes if Israel continued attacking the positions of the militant Shiite Hezbollah movement in Lebanon.

"Although this has helped halt the escalating impact of the situation, the geopolitical backdrop remains tense and a lasting peace deal is still out of reach," said Tony Sycamore, an analyst at IG.

Israeli Prime Minister Benjamin Netanyahu said in the early evening that Iran and Hezbollah were weaker than ever, but the war against them was not over, Reuters reported. He added that if Iran attacked, Israel would respond with force. Trump told the Axios website that he had warned Netanyahu that if he returned to war with Iran, he could be left to fight alone.

The conflict, which began in late February with US-Israeli attacks on Iran, has largely crippled shipping through the Strait of Hormuz. Until then, around a fifth of the world’s oil supplies passed through it.

Oil prices in dollars per barrel (about 159 litres)