Global oil markets experienced a dramatic reversal on Wednesday as prices plunged below $100 per barrel following U.S. President Donald Trump’s announcement of a two-week ceasefire agreement with Iran. The sudden de-escalation of tensions in the Persian Gulf region provided immediate relief to energy markets that had been bracing for a prolonged conflict threatening one of the world’s most critical oil chokepoints.
The benchmark Brent crude fell $14.84, or 13.6%, to settle at $94.43 a barrel, while West Texas Intermediate (WTI) slid $16.13, or 14.3%, to $96.82. This sharp decline came after weeks of escalating prices that saw the steepest monthly oil price increase in history during March, with gains exceeding 50% as the U.S.-Israeli conflict with Iran intensified.
President Trump’s announcement marked a significant turnaround from his earlier ultimatum demanding Iran reopen the Strait of Hormuz, through which approximately 20% of the world’s oil transits. “This will be a double sided CEASEFIRE!” Trump declared on social media, just hours before his deadline for Iran to comply or face widespread attacks on its civilian infrastructure.
Iranian Foreign Minister Abbas Araqchi responded with a statement indicating Tehran would halt its attacks if attacks against it stopped, and that safe transit through the strategic waterway would be possible for two weeks “in coordination with Iranian armed forces.” However, multiple Gulf states continued to report missile launches and drone attacks, issuing warnings to civilians to take shelter even as diplomatic efforts progressed.
Market analysts expressed cautious optimism about the temporary agreement while noting significant uncertainties remain. “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 of Hormuz going forward,” said MST Marquee analyst Saul Kavonic.
According to Reuters reports, Trump revealed the U.S. had received a 10-point proposal from Iran which he described as “a workable basis to negotiate,” adding that parties were “very far along on reaching a definitive agreement for long-term peace.” IG analyst Tony Sycamore commented, “It’s a good start and could pave the way to a more permanent reopening—but lots of ifs still to work out.”
The price dynamics between the two major benchmarks showed unusual patterns, with WTI maintaining its premium over Brent—a reversal of typical price relationships. This anomaly reflects WTI’s May delivery contract versus Brent’s June contract, indicating that barrels with earlier delivery dates are commanding higher prices amid ongoing market uncertainty.
While the immediate ceasefire has provided temporary relief to global energy markets, analysts warn that the underlying geopolitical tensions in the region remain unresolved. The coming weeks will test whether this temporary pause in hostilities can evolve into a more sustainable diplomatic solution, or whether it merely represents a brief intermission in a longer-term conflict that continues to threaten global energy security.
Source: ARY News