Oil prices tumbled and stocks rose sharply in Asian trading early Tuesday after President Donald Trump declared a “complete and total” ceasefire between Israel and Iran, claiming an end to nearly two weeks of military escalation.
At 8:48 p.m. ET Monday, U.S. West Texas Intermediate (WTI) crude fell 3.6% to $66.04, and Brent crude dropped to $68.93, also down 3.6%. The retreat followed a 7.2% plunge on Monday, bringing oil prices below levels seen before Israel’s initial strike on Iran on June 13.
Meanwhile, U.S. stock futures rallied, with investors seemingly betting that geopolitical tensions would ease:
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
- S&P 500 futures rose 0.5% to 6,077.07
- Dow futures climbed 0.5% to 42,895.05
- Nasdaq futures jumped 0.8% to 22,075.67
Markets defied what should have been a jarring development: the United States’ entry into the conflict with direct airstrikes on Iran’s nuclear infrastructure. On Sunday, Trump ordered bombings on three Iranian nuclear sites—Fordow, Natanz, and Esfahan—marking a sharp escalation in America’s military involvement.
The move surprised many, especially after Trump had just days earlier suggested diplomacy could resolve tensions within two weeks. But despite this major development, analysts interpreted the U.S. action as calculated and limited, rather than a prelude to full-blown war.
“The market is downplaying escalation risks, viewing the U.S. strike as a tactical move rather than the start of open-ended conflict,” analysts at Rystad Energy wrote.
That perception was reinforced after Iran’s measured retaliation—a missile attack on a U.S. military base in Qatar that resulted in no reported casualties and was largely intercepted, according to U.S. and Qatari officials. The restrained response fueled speculation that Iran was signaling a willingness to de-escalate.
“The attack on Qatar suggests a desire by Iran to save face without provoking a broader conflict,” Rystad noted.
But Is There Really a Ceasefire?
Hours after Trump’s ceasefire announcement on Truth Social, Iran’s foreign minister Abbas Araghchi threw cold water on the claim, stating there was “no agreement” on a ceasefire. He added that Iran would only stop retaliatory attacks if Israel ceased its “illegal aggression” by 4 a.m. local time Tuesday (00:30 GMT).
In the meantime, Iran launched a fresh round of missiles at Israel, striking the southern city of Beersheba and reportedly killing at least three people, according to Israeli media. This latest attack raises serious doubts about whether Trump’s truce announcement is credible or enforceable.
The ceasefire was supposed to be implemented in stages, according to Trump, and marked what he called the end of the “12-day war.” But developments on the ground suggest there is still no formal, coordinated ceasefire involving all parties.
“This is still a very fluid and fragile situation,” Deutsche Bank analysts said in a note. “Any spark could reignite a broader confrontation.”
Oil Markets Cautiously Watch the Strait of Hormuz
Despite the violence, oil prices fell as traders took comfort in the fact that Iran has not moved to close the Strait of Hormuz, the narrow waterway through which about 20% of global oil supply and 25% of liquefied natural gas trade pass.
“The waterway handles significant volumes for global markets and its importance cannot be understated,” added Janiv Shah, a vice president of oil markets analysis at Rystad Energy.
However, analysts caution that the risk remains. The Iranian parliament has endorsed a move to shut the strait, though any final decision would rest with the country’s Supreme National Security Council.
U.S. Secretary of State Marco Rubio on Sunday called on China, Iran’s top oil customer, to intervene and urge restraint. Rubio warned that it would be “economic suicide” for Tehran to block Hormuz.
“We retain options to deal with that,” Rubio said, suggesting U.S. naval forces could intervene if shipping is disrupted.
For now, oil markets are banking on a pause, driven by tactical restraint and hopes that diplomacy might still prevail. But the U.S. bombing of Iran’s nuclear sites, Iran’s latest attacks on Israeli civilians, and the absence of a verified ceasefire agreement leave the region on edge.
Analysts believe that there are too many conflicting signals to say with confidence that this crisis is over.
If Iran follows through on threats to close Hormuz—or if Israel launches another retaliatory strike—markets could reverse course quickly, triggering spikes in oil prices and volatility across global equities.
This means that the gap between market optimism and on-the-ground reality remains uncomfortably wide.