A two-week ceasefire agreement between the US and Iran, which includes the reopening of the Strait of Hormuz, led to an immediate drop in Brent crude oil prices by USD 15, bringing them to around USD 95 per barrel. Despite this decline, prices remain significantly higher than pre-war levels, reflecting persistent geopolitical and infrastructure risks. Commerzbank’s Thu Lan Nguyen notes that ongoing uncertainty about the ceasefire's durability and the pace of restoring maritime traffic through Hormuz justifies the elevated price levels. The International Energy Agency's Chief Fatih Birol highlighted that approximately 75 energy assets in the region have been 'severely or very severely' damaged, with reconstruction costs estimated at USD 25 billion, particularly affecting gas infrastructure and refineries. As a result, supply disruptions are expected to persist, especially for gas and middle distillates, keeping gas prices well above pre-crisis levels. Following the ceasefire announcement, European gas prices temporarily fell by nearly 20%, but the market remains tense [1].
However, Iran's Fars News Agency reported that oil tankers passing through the Strait of Hormuz have been stopped after Israel breached the ceasefire, according to Reuters. Additionally, Iran's Tasnim News Agency, citing an unnamed source, stated that Iran may withdraw from the ceasefire agreement if attacks on Lebanon continue, as stopping war on all fronts, including Lebanon, was part of the two-week ceasefire deal with the US [2].
The ceasefire has also impacted currency markets. MUFG’s Head of Research Derek Halpenny observed that the ceasefire between the US, Israel, and Iran has sharply weakened the US Dollar as risk sentiment improved and Brent Oil prices fell. He describes this outcome as clearly bearish for the Dollar and suggests further short-term Dollar losses are likely if negotiations progress. Halpenny notes that reversal trades in G10 currencies could see SEK and NZD outperform, while NOK and GBP, which were top performers during the conflict, may underperform. Nevertheless, he cautions that uncertainties remain high, and markets will be sensitive to news on negotiation progress [3].
The US Dollar Index recovered slightly from a four-week low near 98.50, but was still down 0.72% on the day at 98.80 at the time of reporting [2].
CONCLUSION
The US-Iran ceasefire has provided short-term relief to oil and gas markets, with Brent prices dropping and European gas prices temporarily falling. However, persistent geopolitical risks and infrastructure damage are keeping prices elevated, and uncertainty remains high due to potential breaches and ongoing negotiations. Currency markets have responded with Dollar weakness, and further volatility is expected as the situation develops.