WTI Crude Falls Below $65 as Israel-Iran Ceasefire Eases Supply Fears

WTI Crude Falls Below $65 as Israel-Iran Ceasefire Eases Supply Disruption Concerns

West Texas Intermediate (WTI) crude oil fell to around $64.90 during the Asian session on Wednesday, retreating to a two-week low of approximately $64.75. The decline follows news that Israel and Iran have agreed to a ceasefire, significantly reducing fears of a Middle East oil supply disruption.

Ceasefire Lowers Geopolitical Risk Premium

The ceasefire between the two rival nations comes after nearly two weeks of escalating military tensions. The de-escalation is being interpreted by traders as a reduction in geopolitical risk, which has long supported crude prices.

“If the ceasefire is enforced as announced, investors could expect the normalization in oil,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

The belief that oil flows from the region will now remain stable has pushed WTI prices downward, with market sentiment turning slightly bearish in the short term.

API Reports Large Draw in US Crude Inventories

While geopolitical news drove the headlines, the American Petroleum Institute (API) also reported a notable drawdown in US crude oil stocks. According to the API:

• Crude inventories fell by 4.277 million barrels for the week ending June 20.
• This follows a 10.133 million barrel draw the previous week.
• Despite recent drawdowns, year-to-date inventory levels remain 3.3 million barrels higher, reflecting a complex supply-demand dynamic in the US oil market.

Outlook for WTI

With the ceasefire reducing supply risk and inventory data showing consistent drawdowns, WTI may face a consolidation phase unless fresh catalysts emerge. Traders will be watching upcoming official EIA data, as well as any geopolitical developments, for direction.

Related Reading on Tredu.com:

• How Middle East Conflicts Influence Oil Prices
• API vs EIA: Which Oil Inventory Report Moves the Market More?
• WTI Forecast: Will Crude Rebound Above $65?