Global oil prices slid below $100 per barrel on Wednesday after US President Donald Trump announced he had agreed to a two-week ceasefire with Iran, contingent on the immediate and safe reopening of the Strait of Hormuz, a key global oil transit route.
Brent crude futures dropped $14.51, or 13.3%, to $94.76 a barrel at 03:30 GMT, while West Texas Intermediate (WTI) fell $17.16, or 15.2%, to $95.79 a barrel, reflecting markets’ strong reaction to the US-Iran announcement.
Trump’s announcement represented a sharp turnaround from his earlier warning on Tuesday, when he stated on social media that “a whole civilization will die tonight” if Iran did not comply with US demands. Later, he posted that the ceasefire would be “double sided,” highlighting his agreement with Iran to pause hostilities temporarily.
Iran, in turn, said it would halt attacks if offensive operations against it stopped and that safe transit through the Strait of Hormuz would be possible for two weeks in coordination with Iranian armed forces, according to a statement by Foreign Minister Abbas Araqchi on Wednesday.
Despite the ceasefire announcement, multiple Gulf states reported missile launches, drone attacks, and issued warnings to civilians to take shelter, signaling ongoing regional tensions.
“Even with a peace deal, Iran may be emboldened to threaten the Strait of Hormuz more frequently in the future, and the market will price in heightened risk to the Strait going forward,” said Saul Kavonic, an analyst at MST Marquee.
The US-Israeli war with Iran had driven the steepest monthly oil price increase in history in March, with prices rising more than 50%. Analysts warn that geopolitical risks remain, and a significant risk premium could continue in global oil markets depending on the durability of the ceasefire.
Vivek Dhar, an analyst at Commonwealth Bank, said, “There is still scope for a significant geopolitical premium being entrenched for the foreseeable future based on the details of the comprehensive agreement.”
Trump noted that the US had received a 10-point proposal from Iran, which he described as a workable basis for negotiation, and stated that the parties were “very far along on reaching a definitive agreement for long-term peace.”
Erizia Rubyjeana
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