Israel and Lebanon agreed to a ceasefire on June 4, sending crude oil prices down more than 3% and pushing gold up over 1% as the U.S. dollar weakened. The development also hit bitcoin, which has now fully retraced the gains it made during the earlier conflict as geopolitical risk premiums unwind.
Oil slides, gold climbs on dollar move
WTI crude fell to $92.87 a barrel, dropping over 3% after the ceasefire announcement. The decline was tied to expectations that the Strait of Hormuz – through which roughly 20% of global oil supply passes – could see operations normalized if the de-escalation holds. Meanwhile, spot gold rose to $4,475, lifted by a weaker greenback and lower Treasury yields.
IEA warns supply gap isn't closing anytime soon
The International Energy Agency warned that global oil markets will remain undersupplied through the third quarter of 2026, even if the conflict fully ends. Damage to infrastructure and ongoing OPEC+ production decisions will keep supply tight, the agency said, tempering some of the relief from the ceasefire. That means prices could stay elevated even with the peace deal, a headwind for economies still wrestling with inflation.
Fed holds steady, December hike still possible
The Federal Reserve kept interest rates unchanged in the 3.5% to 3.75% range. Markets now see a 30% probability of a rate hike by December, a factor that could continue to influence risk assets including cryptocurrencies. The chance of tighter policy leaves room for further rate moves if inflation picks up again.
Bitcoin gives back its war premium
Bitcoin's price action mirrored the broader macro shift. The asset had risen as conflict escalated and investors sought hedges, but those gains have now evaporated. According to the data, bitcoin has fully retraced its initial conflict-driven gains as geopolitical risk premiums unwound. The retracement suggests the initial rally was more about geopolitical fear than fundamental demand. For now, markets have repriced the ceasefire. But with the IEA forecasting tight supply into late 2026 and the Fed still contemplating a rate hike, the next few months will test whether the relief rally has staying power.
