Global oil prices dropped sharply on Wednesday after US President Donald Trump announced a two-week ceasefire with Iran, easing concerns over supply disruptions.
Brent crude fell to around $95 per barrel from above $109, while US West Texas Intermediate (WTI) slipped to nearly $96, marking a decline of more than 13% in a single session.
The agreement includes the reopening of the Strait of Hormuz, a critical shipping route that carries nearly 20% of global oil supply. The development triggered immediate market reactions, with oil prices falling, US stocks rising and bond yields firming as investor sentiment improved.
Oil had surged in recent weeks, crossing $110 per barrel amid escalating tensions and concerns over restricted tanker movement. Supply fears intensified after Iran effectively blocked the strait following US-Israeli strikes, driving a sharp price rally and raising global inflation concerns.
The ceasefire has reduced the “risk premium” built into crude prices, with traders unwinding positions as supply visibility improves. However, analysts cautioned that the relief may be temporary, as the truce is conditional and limited to two weeks.
While markets have responded positively, uncertainty remains over a longer-term agreement. Any breakdown in negotiations could trigger renewed volatility in global oil prices.
