Oil Prices Plummet on Unconfirmed Ceasefire Report, US Debt Warning

Oil prices took a hit in post-settlement trade after an unconfirmed report from Russian agency RIA claimed that a US-Iran ceasefire had been agreed, including free navigation through the Strait of Hormuz. The report remains uncorroborated by Western wires or Iranian state media, but continued to weigh on prices throughout the session.

Separately, Axios reported that Secretary of State Marco Rubio has told allied foreign ministers that the US is shifting its approach from military strikes to sanctions on Iran for now, citing the naval blockade and mine clearance operations in the Strait of Hormuz as having reduced Tehran's leverage over global oil flows. This de-escalatory tone was reinforced by Reuters' report that the US has begun returning staff to Middle East embassies that were evacuated or downsized during the Iran war.

Richmond Fed President Tom Barkin cautioned that rising US debt will eventually lead to a reckoning, warning that at some point investors could stop buying US debt. He maintained his preference for holding interest rates steady given evidence of easing inflation, while acknowledging that officials may need to raise rates if price pressures become embedded.

The Reserve Bank of Australia (RBA) is likely to hike interest rates in September following the release of strong Australian inflation data, which saw core inflation particularly firm. The data raises the risk that inflation remains too high and fails to fall in line with the RBA's own forecasts.