Oil prices rise as Iran-Israel tensions persist despite ceasefire signals

Oil prices recorded slight gains in early trading on Tuesday as tensions between Iran and Israel continued despite both countries signalling a pause in direct hostilities following an appeal by U.S. President Donald Trump.

Brent crude futures increased by 13 cents, or 0.14%, to $94.38 per barrel as of 0001 GMT, while U.S. West Texas Intermediate crude rose 11 cents, or 0.12%, to $91.41 per barrel.

The market had surged by as much as 5% in the previous session after fresh Israeli strikes on Iran and attacks in Lebanon dampened hopes of a quick resolution to the broader conflict. However, gains eased after Iran’s military announced an end to operations against Israel.

Tim Waterer, chief market analyst at KCM Trade, said although the temporary halt in direct attacks had brought some relief, investors remained uncertain about the durability of the ceasefire.

According to him, the market continues to factor in geopolitical risks rather than expecting a permanent resolution to the conflict.

Iran and Israel both stated that they had stopped attacking each other after President Trump urged them to immediately cease hostilities. However, Tehran warned that it would resume strikes if Israel continued targeting Hezbollah in Lebanon.

Tony Sycamore, a market analyst at IG, noted that although the latest developments prevented the crisis from escalating further, tensions in the region remained high and prospects for a long-term peace agreement were still uncertain.

Israeli Prime Minister Benjamin Netanyahu also warned in a televised address that Israel would respond forcefully to any further attacks from Iran.

Meanwhile, President Trump told Axios that he had cautioned Netanyahu against returning to war with Iran, warning that Israel could end up fighting alone if hostilities resumed.

Analysts say the major concern now is whether current diplomatic efforts will lead to lasting peace or merely represent a temporary break in the conflict.

A major issue in ongoing peace discussions is the reopening of the Strait of Hormuz, a vital shipping route through which nearly one-fifth of global oil supplies passed before the U.S. and Israel launched airstrikes on Iran in February.

In a related development, the U.S. military announced on Monday that its forces disabled an empty oil tanker in the Gulf of Oman after it allegedly attempted to travel to an Iranian port in breach of the blockade imposed on Iran.