Oil prices have sharply declined following the announcement of a temporary ceasefire between the United States and Iran, easing fears of major supply disruptions in global energy markets.
Brent crude and U.S. West Texas Intermediate (WTI) both fell by nearly 15%, dropping to $93.92 and $95.70 per barrel, respectively—their lowest levels in the past month.
Less than two hours before his self-imposed deadline expired, U.S. President Donald Trump agreed to a two-week ceasefire with Iran. The truce is conditional on Iran lifting its blockade of the Strait of Hormuz, a critical chokepoint for global oil shipments, Trump announced on his Truth Social platform.
Despite the market relief, analysts remain cautious. Under normal conditions, around 135 vessels pass through the strait daily, and restoring full traffic is expected to take time even in a best-case scenario.
“Supply chain disruptions and temporary shortages across energy and commodity markets remain a significant risk,” analysts from Germany’s Baden-Württemberg State Bank noted.
The ceasefire has also boosted global stock markets. Japan’s Nikkei index surged by 5%, while South Korea’s Kospi rose by 6%.
However, uncertainty remains over whether the truce can lead to a lasting resolution. The key question, analysts say, is whether negotiations will make meaningful progress over the next two weeks.
“That will determine whether the current market movement is just a short-term relief rally or the beginning of a broader de-escalation,” said Charu Chanana, investment strategist at Saxo Bank.
