Brent Plunges as Trump Announces Two-Week Ceasefire with Iran
Oil prices fell sharply below $100 a barrel on Wednesday after U.S. President Donald Trump said he had agreed to a two-week ceasefire with Iran, conditional on the immediate and safe reopening of the Strait of Hormuz. Brent crude fell $15.78, or 14.4%, to $93.49 a barrel at 10:24 GMT, while WTI fell $18.90, or 16.7%, to $94.05. In product markets, European benchmark diesel also fell 20.4% to $1,216.75 a metric ton.
The declines reflected the unwinding of the supply risk premium after Trump's change of heart came ahead of a deadline he had previously set for Iran to open Hormuz or face widespread attacks on civilian infrastructure. The narrow strait is the passage of about 20% of the world's daily oil supply. Trump called the ceasefire a two-way deal, after escalating tensions with a harsh social media statement the previous day.
Iran has said it will halt attacks if attacks on it cease, and stated that safe transit through the Strait of Hormuz will be possible for two weeks in coordination with the Iranian armed forces, according to a statement by Foreign Minister Abbas Araqchi. Some analysts believe that, in theory, the approximately 10–13 million barrels per day of crude and product supplies currently stuck behind Hormuz could potentially be released gradually, although restoring them to pre-March levels will depend on whether the ceasefire can be translated into a permanent peace through negotiations in Pakistan.
On the ground, shippers are still seeking clarity on logistics, while some refiners have begun inquiring about loading new cargoes in response to the agreement. At the same time, several Gulf states have reported missile launches and drone attacks or issued warnings to civilians to take shelter, confirming that the risk of escalation has not completely disappeared.
The market is also weighing whether the geopolitical premium will completely disappear, given that some analysts expect Iran to use threats against Hormuz more frequently going forward, so structural risks in the route remain priced in. The US-Israel war with Iran previously drove the sharpest monthly oil price increase in history, exceeding 50%, and some believe there is still room for a sustained risk premium depending on the details of a comprehensive agreement and progress toward a long-term deal. (gn)
Source: Newsmaker.id
