Oil prices fall below $90 for first time since August

Oil prices have plummeted below $90 a barrel for the first time since August, as hopes for a Middle East ceasefire deal and increased traffic through the Hormuz strait bolster the market. President Donald Trump declared the war with Iran "effectively over" during a White House press conference, expressing optimism that the conflict would soon conclude.

Brent crude, the international benchmark, had maintained a price above $90 for over three months due to Iran's control over key shipping lanes and the Houthis' attacks on Saudi Arabia's energy infrastructure and airports. Despite the ongoing aggression, trade through the Strait of Hormuz has surged, with liquefied natural gas (LNG) exports hitting their highest level since the war began last month.

Analysts believe the ceasefire negotiations and the surge in Hormuz traffic are offsetting the impact of Houthi and Iranian attacks on Saudi vessels. Consequently, the price of oil has plummeted 25% since its late-October peak of $117 a barrel. The drop in oil prices is expected to trigger a rally in equities and government bonds, as traders reduce their exposure to the war's potential inflationary effects.

Gilt yields, which gauge inflation expectations and interest rates, have fallen significantly, with the two-year yield dropping more than 20 basis points and the 10-year yield falling over 30 basis points.