Oil drops below $100 on US-Iran ceasefire deal
Oil prices plunged below $100 per barrel on Wednesday after 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 $16.32, or 14.9 per cent, to $92.95 a barrel by 0630 GMT, while US West Texas Intermediate (WTI) dropped $18.16, or 16.1 per cent, to $94.79.
Trump’s shift came shortly before a deadline he had set for Iran to reopen the strait, through which around 20 per cent of global oil supply passes, or face attacks on its civilian infrastructure. He said in a social media post that the agreement would be a “double-sided ceasefire,” after earlier warning of severe consequences if demands were not met.
Iran said it would halt its attacks if strikes against it stopped, adding that safe transit through the strait would be ensured for two weeks in coordination with its armed forces, according to a statement by Foreign Minister Abbas Araqchi.
Analysts said future price movements would depend on whether negotiations lead to a lasting agreement and sustained normalisation of flows through the strait, warning that volatility is likely to persist during ongoing talks.
Several Gulf states reported missile launches and drone attacks or issued civil defence warnings, highlighting continued regional tensions despite the ceasefire announcement.
Analysts also warned that even with a potential agreement, risks to the Strait of Hormuz could remain elevated, with markets likely to factor in a long-term geopolitical premium. The recent US-Israeli war with Iran had already driven oil prices to their steepest monthly increase on record in March, rising by more than 50 per cent.
Trump said Washington had received a 10-point proposal from Iran that could serve as a basis for negotiations, adding that both sides were close to reaching a broader long-term agreement. Analysts described the development as a positive initial step, but cautioned that significant uncertainties remain.
Attribution: Reuters