Global oil prices fell as much as 6% following market expectations that a ceasefire between Iran and Israel would ease supply disruption risks from the Middle East region. However, the truce was seen as fragile after U.S. President Donald Trump accused both sides of violating the agreement just hours after it was announced.

According to Reuters data on Wednesday (June 25, 2025), Brent crude for August delivery dropped by US$4.34, or 6.1%, to US$67.14 per barrel. Meanwhile, West Texas Intermediate (WTI) crude fell by US$4.14, or 6.0%, to US$64.37 per barrel. These figures marked the lowest closing prices since June 10, 2025 for Brent and June 5, 2025 for WTI—prior to Israel’s surprise attack on Iran’s military and nuclear facilities on June 13.

Tamas Varga, senior analyst at PVM Oil Associates, stated that the geopolitical risk premium that had developed following Israel’s initial strike nearly two weeks ago has now completely vanished. On the previous Monday, both Brent and WTI had already fallen by more than 7%, following a rally to five-month highs triggered by U.S. strikes on Iranian nuclear sites.

The direct involvement of the United States in the conflict raised market fears over potential disruptions in the Strait of Hormuz—a narrow waterway between Iran and Oman through which 18–19 million barrels of crude oil and fuels are shipped daily, accounting for nearly one-fifth of global consumption.

In addition to geopolitical pressures, oil prices were also weighed down by Trump’s remarks suggesting that China—the world’s top oil importer—could still continue buying oil from Iran. Another pressure came from supply-side expectations.

Kazakhstan’s state-owned oil company, KazMunayGaz, revised its 2025 production outlook at the Tengiz oil field operated by Chevron to 35.7 million metric tons, up from a previous estimate of 34.8 million tons. Kazakhstan is part of the OPEC+ alliance, which includes OPEC members and their allies. Several other OPEC+ countries have also started to increase production.

In Guyana, oil output rose to 667,000 barrels per day (bpd) in May from 611,000 bpd in April, due to higher production at two of the three facilities operated by Exxon Mobil.

Economic Factors and U.S. Oil Inventories

Additional negative sentiment came from a surprise drop in the U.S. consumer confidence index this month, as households became increasingly concerned about job availability and economic uncertainty stemming from President Trump’s tariff policies.

John Williams, President of the New York Federal Reserve, said that U.S. economic growth is expected to slow down while inflationary pressure is likely to rise this year, mainly due to the impact of tariffs. This indicates that the Federal Reserve is unlikely to cut interest rates anytime soon, even though such a move could boost oil demand.

Meanwhile, crude oil inventory reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA) are expected this week. Analysts estimate that U.S. crude stockpiles fell by around 800,000 barrels during the week ending June 20. If accurate, this would mark the fifth consecutive week of inventory declines—the first time since January. For comparison, inventories rose by 3.6 million barrels during the same period last year, while the five-year average decline is 2.5 million barrels.