Lebanon Ceasefire Sends Oil Down, Gold Up

Iran called for a ceasefire and Israel and Lebanon agreed to implement one on June 4, triggering sharp moves in commodity markets. U.S. West Texas Intermediate crude dropped more than 3% to $92.87 per barrel in one of the largest single-session falls in weeks. Spot gold rose more than 1% to $4,475 as the dollar weakened and U.S. Treasury yields fell.

Market participants said the agreement removed one of Iran’s stated preconditions for broader diplomacy, prompting traders to reprice supply risk for oil. Oil prices fell as the immediate security premium tied to regional conflict eased, while gold gained because a softer dollar makes the metal cheaper for buyers using other currencies and lower yields reduce the opportunity cost of holding non-yielding assets.

About 20% of global oil trade passes through the Strait of Hormuz, and investors noted that reduced tensions could lower the perceived risk to shipping routes. Traders adjusted positions ahead of any formal diplomatic steps, treating the ceasefire as a condition met rather than a final settlement.

The International Energy Agency has warned that global oil markets could remain undersupplied through the third quarter of 2026 because damaged infrastructure and production decisions by major producers take months to reverse. Analysts expect OPEC+ choices and the time needed to repair or restart projects to keep upward pressure on prices even if near-term risk premiums fall.

Monetary factors also supported gold. The Federal Reserve’s policy rate is in a 3.5%–3.75% range, and markets put roughly a 30% probability on another rate hike by December. Lower real yields after the drop in Treasury yields helped lift the metal separate from geopolitical developments. Bitcoin, which rallied when regional tensions rose, gave back earlier gains as the market’s war premium eased.

Traders said upcoming economic data will influence how durable the market moves are. U.S. nonfarm payrolls due Friday are expected to affect growth and rate expectations, and could reinforce or reverse the day’s repricing. For now, energy markets are discounting a reduced immediate supply risk while precious metals are finding support from a softer dollar and lower yields.