Oil prices dropped sharply below $100 per barrel on Wednesday after U.S. President Donald Trump announced a two-week ceasefire agreement with Iran, tied to the immediate and safe reopening of the strategically vital Strait of Hormuz.
Brent crude futures plunged $14.51, or 13.3%, to $94.76 per barrel as of 0330 GMT, while U.S. West Texas Intermediate (WTI) fell $17.16, or 15.2%, to $95.79 per barrel.
The sudden policy shift came just before Trump’s deadline for Iran to reopen the Strait of Hormuz through which about 20% of global oil supply passes or face potential attacks on its civilian infrastructure. In a social media post, Trump described the agreement as a “double-sided ceasefire,” after earlier warning that “a whole civilization will die tonight” if demands were unmet.
Iran, through Foreign Minister Abbas Araqchi, confirmed it would halt attacks provided hostilities against it ceased. The country also pledged to ensure safe oil transit through the Strait for the two-week period in coordination with its armed forces.
Despite the ceasefire announcement, tensions remain high. Several Gulf states reported missile launches and drone activity or issued warnings urging civilians to seek shelter.
Analysts caution that risks to oil markets persist. MST Marquee’s Saul Kavonic noted that even with a peace deal, Iran could continue to pose threats to the Strait, potentially embedding long-term geopolitical risk into oil prices. Similarly, Commonwealth Bank analyst Vivek Dhar highlighted the likelihood of a sustained “geopolitical premium” depending on the details of any lasting agreement.
The recent conflict involving the U.S., Israel, and Iran triggered the steepest monthly oil price surge on record in March, exceeding 50%.
Trump also revealed that the U.S. had received a 10-point proposal from Iran, describing it as a workable foundation for negotiations and signaling that both sides were close to a broader peace agreement.
Meanwhile, market dynamics have shifted, with WTI maintaining an unusual premium over Brent crude due to differences in delivery timelines, as traders place higher value on near-term supply.
