UNS: Global oil prices dropped sharply on Wednesday after Donald Trump announced a tentative two-week ceasefire agreement with Iran, easing immediate concerns over supply disruptions through the critical Strait of Hormuz.
Brent crude futures plunged by $14.84, or 13.6%, settling at $94.43 per barrel, while U.S. West Texas Intermediate (WTI) fell $16.13, or 14.3%, to $96.82 per barrel in early trading. The sharp decline followed heightened volatility in recent weeks driven by escalating geopolitical tensions in the region.
The ceasefire announcement came just hours before a deadline set by Trump, who had warned Iran to ensure the reopening of the Strait of Hormuz or face potential strikes on its infrastructure. Roughly 20% of the world’s oil supply passes through this narrow waterway, making it a vital artery for global energy markets.
In a social media statement, Trump described the development as a “double-sided ceasefire,” signaling cautious optimism after earlier warnings of catastrophic conflict. Iranian officials, including Foreign Minister Abbas Araqchi, confirmed that Tehran would suspend its military actions provided attacks against Iran also cease. They added that safe passage through the strait would be coordinated with Iranian forces during the temporary truce.
Despite the announcement, tensions remain elevated. Several Gulf nations reported missile launches and drone activity, urging civilians to remain alert. Analysts warn that even with a temporary peace, risks to oil transit could persist.
Market experts noted that future pricing may continue to reflect geopolitical uncertainty. Meanwhile, WTI has traded at a premium over Brent due to nearer-term delivery contracts, reversing the usual pricing trend. The situation remains fluid, with hopes that the ceasefire could lead to longer-term stability.
