Oil Tumbles as Iran and Israel Halt Attacks, War Premium Drains Out Before CPI

Oil fell hard Tuesday. WTI dropped 2.3 percent to 89.22 dollars and Brent slid 1.8 percent to 92.55 dollars, as Iran and Israel agreed to halt attacks against each other and the war premium that spiked crude on Monday started draining out. Two days ago Brent was trading above 94. The supply scare is fading, and fast.

This has been building since late February, when the Strait of Hormuz effectively shut. Traffic through the chokepoint is still down 90 to 95 percent from pre-war levels, so the market has spent months pricing a permanent threat to roughly a fifth of the world's seaborne oil. Monday made it worse for a few hours. Iran and Israel traded missile strikes, Brent jumped above 98 intraday, and then Iran said it had ended operations. That was the turn.

Tuesday extended it. President Trump is pushing a fresh 60-day ceasefire with Tehran, framed as the runway to broader talks that could gradually restore Gulf oil exports. WTI sat near 89.22 dollars through the morning, down 2.3 percent, Brent near 92.55, off 1.8 percent. The dollar came off its two-month high too, easing back toward 99.85 as the safe-haven bid faded. Less war, less premium, on oil and on the dollar both. Israel, worth noting, has not actually signaled de-escalation yet.

Everything else leaned the same way. Gold trimmed its losses to 4,330 dollars after touching its lowest since March 23, the inflation-and-haven trade pulling in two directions at once. Equity futures firmed after Monday's chip-led rally, with the S&P having closed at 7,405 and the Nasdaq at 25,929. Crypto was the odd one out. Bitcoin slipped back under 64,000 dollars, near 63,400, and that dip triggered around 1.1 billion dollars in liquidations in 24 hours. Rate nerves, not war.

The timing is the whole story. May CPI lands Wednesday, with PPI Thursday, both feeding straight into next week's Fed meeting. Cheaper oil takes some heat out of the energy-inflation channel right when the market needs the print to behave. But Hormuz is still barely open, and a ceasefire nobody has fully signed can come apart on one headline. A hold in June is basically locked at 99 percent. It's December that has moved, markets now price better than a 40 percent chance of a hike, up from 14 a month ago. That's the number doing the damage to crypto.

So oil handing back its war premium is the relief valve today, and it's leaning the whole tape toward calm into CPI. But this is a truce, not a peace. One strike, one bad inflation line Wednesday, and the premium walks right back in. For now the market is choosing to breathe.