17th June 2026
Brent crude oil has fallen back below $80 a barrel, even though the final details of the Middle East peace agreement have yet to be completed.
For many people this seems strange. Surely prices should wait until the agreement is signed?
In fact, financial markets rarely work that way.
The old saying on the stock market is:
"Buy on the rumour, sell on the news."
In other words, markets don't wait for certainty. They move when investors believe they know what is likely to happen.
Markets look ahead, not behind
Every day, millions of traders around the world are trying to answer one question:
What will happen next?
Oil prices are therefore based not just on today's supply and demand, but on what traders expect supply and demand to look like in the weeks and months ahead.
If they believe the risk of disruption is falling, prices begin to fall immediately.
What changed?
Only a short time ago, there were serious fears that conflict in the Middle East could disrupt shipping through the Strait of Hormuz, one of the world's most important oil routes.
Around one-fifth of the world's traded oil passes through this narrow waterway.
Any prolonged closure could have sent oil prices sharply higher.
Now the picture looks rather different.
Investors are becoming increasingly confident that:
the ceasefire will hold
a formal peace agreement will be reached
shipping through the Strait of Hormuz will continue
insurance costs for tankers will gradually fall
oil exports from the region will become more predictable
Even though some uncertainty remains, markets are already adjusting to what they believe is the most likely outcome.
Why prices could still move
The story is far from over.
If the agreement is signed smoothly and shipping returns to normal, oil prices could edge a little lower over the coming days.
However, much of the expected good news has probably already been reflected in today's prices.
That means further falls are likely to be smaller unless there is additional positive news.
On the other hand, markets can change direction very quickly.
Any sign that:
negotiations are delayed
tensions increase again
shipping is disrupted
or either side fails to honour the agreement
could easily push prices back upwards.
What does this mean for the UK?
Lower oil prices are welcome news for households and businesses.
If prices remain around current levels, we could gradually see:
lower petrol and diesel prices
lower heating oil costs, particularly important in rural areas such as Caithness
lower transport costs for businesses
reduced inflationary pressures
less upward pressure on interest rates
These changes do not happen overnight.
Fuel already in storage was often bought at higher prices, so it usually takes several weeks before lower wholesale prices feed through to filling stations and heating oil suppliers.
Looking beyond this week
The biggest influence on oil prices over the coming months is unlikely to be the peace agreement itself.
Instead, markets will be watching:
whether the ceasefire remains stable
how quickly shipping returns to normal
the level of global economic growth
oil production by OPEC+
and demand from major economies such as China, the United States and Europe.
The bigger lesson
This week's fall in oil prices is a useful reminder of how financial markets operate.
They do not wait for certainty.
Instead, they constantly try to predict tomorrow's news before tomorrow arrives.
That is why oil prices can fall before a peace agreement is signed, stock markets can rise before an economy recovers, and currencies can move before central banks change interest rates.
By the time the official announcement finally arrives, much of the change has often already been reflected in market prices.
That is one of the reasons financial markets sometimes appear to react before the news itself. In reality, they are reacting to expectations rather than waiting for certainty.