08:41 AM EDT, 06/24/2025 (MT Newswires) -- Oil fell for a second day on Tuesday as it cedes a risk premium after the United States and Iran backed away from hostilities while Iran and Israel reached a shaky ceasefire agreement.

West Texas Intermediate crude oil was last seen down US$2.50 to US$66.01 per barrel, a drop of 12% from the five-month high of of US$75.14 set on June 18, while August Brent crude was down US$2.61 to US$68.87.

A weekend U.S. attack on Iran's uranium-enrichment facilities was met on Monday with a face-saving Iranian attack on a U.S. base in Qatar that had hours of warning from Iran ahead of the strike. Then Iran and Israel reached a ceasefire deal in their 12-day war launched by Israel, even as both sides violate the agreement with further attacks.

"Iran, instead of targeting oil infrastructure or shipping lanes, opted for a carefully calibrated and largely symbolic response. Tehran, reportedly in coordination with Qatari officials, launched a missile strike on a U.S. military base in Qatar, giving prior warning to minimize casualties. The action was interpreted by the market as a face-saving maneuver designed to de-escalate rather than escalate hostilities. A few hours later, Israel confirmed it had agreed to a U.S.-brokered ceasefire with Iran," Ole Hansen, head of commodity strategy at Saxo Bank, wrote.

Despite the uncertain ceasefire, fears over a widening Middle Eastern war that could cut oil supply from the Persian Gulf have eased, returning focus to an oversupplied market as OPEC+ continues to return production cuts to market, with a third 411,000 barrel per day tranche of new supply coming on July 1.

Supply outside of the cartel is also on the rise, with U.S. production near record levels above 13-million barrels per day,, while S&P Global Commodity Insights on Tuesday raised its forecast for production from Canada's oil sands to a record 3.5-million bpd this year, 5% above 2024, and sees output topping 3.9-million bpd by 2030.