Global oil markets saw a sharp decline on Tuesday as prices dropped around 16% following a surprise ceasefire agreement between the United States and Iran. The deal, announced by Donald Trump, aims to pause hostilities for two weeks in exchange for Iran allowing safe passage through the crucial Strait of Hormuz.
U.S. benchmark West Texas Intermediate (WTI) crude for May delivery fell more than 16% to $94.47 per barrel, while Brent crude for June delivery dropped over 15% to $92.21 per barrel. The sharp decline reflects reduced fears of supply disruptions in one of the world’s most important oil transit routes.
According to Trump, the ceasefire is conditional on Iran ensuring the immediate and secure reopening of the Strait. He also noted that the U.S. had received a 10-point proposal from Tehran, calling it a workable foundation for a broader agreement.
Iran’s Foreign Minister, Seyed Abbas Araghchi, confirmed that Tehran would allow safe navigation during the ceasefire period. He stated that Iran’s armed forces would halt defensive operations if attacks against the country are stopped.
The agreement came just hours before a U.S. deadline, after which Trump had threatened major military strikes. Diplomatic efforts by Shehbaz Sharif were instrumental, as he urged both sides to allow more time for negotiations.
The Strait of Hormuz, which previously handled nearly 20% of global oil supply, had faced severe disruptions during the conflict. While the ceasefire has provided temporary relief to markets, analysts warn that long-term stability will be essential to prevent further volatility in global oil prices.