US-Iran Ceasefire Report Sends Oil Prices Lower – Sputnik

RIA Novosti reported that Washington and Tehran have agreed to a ceasefire, citing Iranian and Pakistani sources. International oil prices retreated under cooling ceasefire expectations, with Brent crude futures briefly falling below the $100-per-barrel mark, significantly easing market concerns over Middle East supply disruptions.

**Ceasefire Speculation Caps Risk Premium**

Earlier escalation in the US-Iran conflict had driven oil prices sharply higher, with Brent crude remaining near multi-year highs before the ceasefire news. As the two sides agreed to a two-week ceasefire, including terms to reopen the Strait of Hormuz, the market quickly gave back geopolitical premiums. According to multiple foreign media reports, the ceasefire is set to take effect at 8:00 AM Iran time, and Pakistan's Prime Minister has invited US and Iranian representatives to Islamabad for negotiations.

**Supply-Side Pressures Accumulate**

Beyond the ceasefire news, expectations of increased supply are also weighing on oil prices. On May 14, a representative of the Organization of the Petroleum Exporting Countries stated that the group aims to steadily raise oil quotas over the coming months, with plans to complete the restoration of all halted production capacity by the end of September. Earlier, OPEC+ had announced output increases in May and planned further production hikes in June. Although production cuts forced by the conflict among Middle Eastern producers have introduced uncertainty into the expansion plans, the ceasefire outlook has strengthened expectations of a supply recovery.

**Market Response Leans Toward Rising Risk Appetite**

The ceasefire speculation drove broad gains in risk assets, with Asia-Pacific equities and US stock futures rising in tandem, the dollar index weakening, and gold extending its advance. Analysts noted that if the ceasefire agreement is implemented, the reopening of the Strait of Hormuz would significantly ease global energy transport pressures, potentially leading oil prices to give back more of the gains since the conflict began. However, the ceasefire agreement remains conditional, and subsequent implementation will require monitoring.