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Tankers at the Khon looks at the container termal aang the stry of hormuz.Photograph: Giuseppe Cacace/AFP/Getty Images
Oil prices have pared back losses after a sharp fall triggered by Donald Trump’s declaration of a ceasefire between Israel and Iran was tempered by doubts that the truce would hold.
Donald Trump wrote on the Truth Social platform on Tuesday morning: “It has been fully agreed by and between Israel and Iran that there will be a Complete and Total CEASEFIRE.” Israel then confirmed it had “agreed” to the proposal.
In response, Brent crude, the global benchmark, fell for a second day, initially down more than 5% to $67.65 (£49.83) a barrel, after tumbling by 7% on Monday.
Related: The strait of Hormuz: how could Iran close it and why does it matter to global trade?
However, the price traded only 3% lower at $69.21 a barrel later on Tuesday, the lowest since 12 June. Israel’s military said it had detected another Iranian barrage of missiles hours after the start of the ceasefire, which was denied by Iranian media, Reuters reported. Israeli defence minister Israel Katz said Israel would respond “forcefully”.
Financial markets have been lifted by news of the ceasefire. In London, the FTSE 100 edged 0.3% higher, while Germany’s Dax rose by almost 2%. In Asia, Japan’s Nikkei climbed by 1.1% and Hong Kong’s Hang Seng gained 2.1%.
Kathleen Brooks, research director at XTB, said: “While the agreement initially looked solid, this is still a very fluid situation. The IDF [Israel Defense Forces] announced this morning that missiles were fired into Israel from Iran, which caused the oil price to pare losses, as Brent crude edged back towards $70 a barrel.
“Brent crude had rallied nearly 20% in the past month as a war premium was attached to the price of oil, which is now being unwound. However, if there are more signs that the ceasefire is not holding, we could see the oil price resume its uptrend.”
Airline and travel stocks rose on news of the ceasefire, and shares in Air France KLM, British Airways owner IAG, Hungary’s Wizz Air and Germany’s Lufthansa were up between 5% and 8% in early trading. Europe’s largest travel operator, Tui, jumped by 8%, while Intercontinental Hotels rose by 3.5% and French hospitality company Accor was up by 6%.
Airlines are continuing to halt some flights to the Middle East, due to safety concerns, despite the ceasefire news. BA has suspended all flights to Doha up to and including 25 June, and the budget carrier Wizz Air has cancelled flights to and from the United Arab Emirates until 30 June.
The UK travel company Saga reported that its ocean and river cruises had a strong start to the year, and said it had not been affected by the Middle East conflict. It does not offer cruises to the region and only sells holidays to Jordan and Egypt.
