Global oil prices plunged on Wednesday, with both Brent crude and US West Texas Intermediate (WTI) falling below the $100-per-barrel mark after US President Donald Trump announced a temporary ceasefire with Iran.
In early trading, Brent crude dropped 13.6% to $94.43 per barrel, while WTI fell over 14.3% to $96.82, marking one of the sharpest single-day declines in nearly six years.
The sell-off followed Trump’s announcement of a two-week “double-sided ceasefire,” contingent on the immediate reopening of the Strait of Hormuz—a vital global oil corridor that carries nearly 20% of the world’s crude supply.
Markets reacted swiftly, with easing fears of prolonged supply disruptions triggering a broad risk-on sentiment. Global equities also rallied as investors welcomed signs of de-escalation in the Middle East.
Trump’s statement came just ahead of a self-imposed deadline for Iran to guarantee safe passage through the Strait or face potential military strikes on its infrastructure. Earlier, he had issued stark warnings, escalating tensions before the sudden diplomatic shift.
Iran signalled conditional cooperation, with Foreign Minister Abbas Araqchi stating that Tehran would halt attacks if aggression against it ceased. He also indicated that safe transit through the Strait would be ensured for the duration of the ceasefire, in coordination with Iranian forces.
Despite the market optimism, the situation remains fragile. Reports of missile launches and drone activity across the Gulf underline the continuing volatility on the ground.
Analysts have warned that while the ceasefire offers short-term relief, longer-term risks to oil supply persist. Some believe Iran could continue to leverage the Strait of Hormuz as a strategic pressure point, keeping markets on edge.
“It’s a positive first step, but significant uncertainties remain,” analysts noted, highlighting that any lasting stability will depend on sustained diplomatic progress.
The recent conflict involving the US, Iran, and Israel had already pushed oil prices sharply higher, with March witnessing a surge of over 50%—one of the steepest monthly increases on record.
