Oil prices crash 14% on US-Iran ceasefire, Hormuz reopening
What's the story
Oil prices have witnessed a major drop, falling below $100 a barrel. The decline comes after US President Donald Trump announced a two-week ceasefire with Iran. The decision is contingent on the immediate and safe reopening of the Strait of Hormuz, a key route carrying 20% of the world's oil supply. Following Trump's announcement, Brent crude fell $14.84, or 13.6%, to $94.43 a barrel, while WTI dropped $16.13, or 14.3%, to $96.82 a barrel.
Ceasefire details
Ceasefire announcement comes after Trump's warning to Iran
Trump's announcement comes just before his deadline for Iran to reopen the Strait of Hormuz or face attacks on its civilian infrastructure. The US President had warned that "a whole civilization will die" if his demands weren't met. In response, Iran has said it will stop its attacks if aggression against it stops and safe passage through the Strait of Hormuz would be ensured for two weeks in coordination with its armed forces.
Market reaction
Oil prices spiked by over 50% in March
The US-Israeli war with Iran had triggered a record monthly spike in oil prices in March, rising over 50%. The conflict has mainly targeted critical energy infrastructure, disrupting key supply channels and raising concerns across global energy markets. International brokerage Macquarie has said that even if tensions ease in the near term, oil prices are likely to find support in the $85-$90 range.
Price forecast
Analysts warn of volatile crude oil outlook
Experts warn that if tensions persist, the outlook for crude oil remains volatile and tilted upward. Continued conflict in the Middle East, especially disruptions around the Strait of Hormuz, would keep supply chains constrained. This could push Brent and WTI prices higher and sustain inflationary pressures worldwide. MST Marquee analyst Saul Kavonic told Reuters that "even with a peace deal," Iran may be emboldened to threaten the Strait of Hormuz more frequently in the future.