Oil prices fell almost 6% to a two-week low on June 24 on expectations the ceasefire between Israel and Iran will reduce the risk of oil supply disruptions in the Middle East.

That ceasefire, however, was on shaky ground with U.S. President Donald Trump accusing both Israel and Iran of violating it just hours after it was announced.

Brent crude futures fell $4.02, or 5.6%, to $67.46/bbl at 1:26 p.m. EDT (1726 GMT). U.S. West Texas Intermediate (WTI) crude fell $3.84, or 5.6%, to $64.67.

Brent was on track for its lowest settlement since June 10 and WTI for its lowest since June 6, both before Israel launched a surprise attack on key Iranian military and nuclear facilities on June 13.

"The geopolitical risk premium built up since the first Israeli strike on Iran almost two weeks ago has entirely vanished," said Tamas Varga, a senior analyst at TP ICAP's PVM Oil Associates brokerage and consulting firm.

On June 23, both oil contracts settled more than 7% down. They had rallied to five-month highs after the U.S. attacked Iran's nuclear facilities over the weekend.

The direct U.S. involvement in the war also focused investors on the Strait of Hormuz, a narrow waterway between Iran and Oman, through which between 18 million and 19 million barrels per day (bpd) of crude oil and fuels flow, accounting for nearly a fifth of global consumption.

Prices also fell as Trump posted on social media platform Truth Social that China, the world's second biggest economy behind the U.S., can now continue to purchase oil from Iran.

In other supply news, Kazakhstan's state energy company KazMunayGaz raised its forecast for oil output at the Chevron-led Tengiz oilfield, the country's largest, to 35.7 MMmt in 2025 from 34.8 million tons expected previously, as it boosts output.

Kazakhstan is a member of the OPEC+ group of countries that includes the Organization of the Petroleum Exporting Countries (OPEC) and allies.

"Prior to the outbreak of hostilities between Israel and Iran, we had been suggesting a bearish stance mainly due to increased OPEC+ production that has prompted ample crude supplies, an evolving dynamic that has intersected with expected demand deterioration largely due to the Trump tariffs," analysts at energy advisory Ritterbusch and Associates said in a note.

In Guyana, oil output rose to 667,000 bbl/d in May from 611,000 bbl/d in April, fueled by increases at two of the three production facilities operated by U.S. major Exxon Mobil.

U.S. oil inventories

The American Petroleum Institute (API) trade group and the U.S. Energy Information Administration (EIA) were due to release U.S. oil inventory data.

Analysts forecast energy firms pulled about 0.8 MMbbl of oil from U.S. stockpiles during the week ended June 20.

If correct, that would be the first time energy firms pulled oil from storage for five weeks in a row since January. That compares with a build of 3.6 MMbbl during the same week last year and an average decrease of 2.5 MMbbl over the past five years (2020-2024).

The API releases its numbers on June 24 and the EIA on June 25.
 

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