Global crude oil prices on Wednesday plunged sharply up to 20 per cent after US President Donald Trump announced a two-week ceasefire with Iran, including a commitment to restore navigation through the Strait of Hormuz. The Iran ceasefire announcement triggered a sharp fall in global crude oil prices, easing supply concerns.
Global crude oil prices drop sharply
The international benchmark Brent crude futures shed nearly 16 per cent or $17.39 to $91.88, hitting an intraday low, while US WTI crude declined almost 20 per cent or $21.90 to $91.05. The Brent crude price fall and WTI crude decline reflect easing geopolitical tensions in global markets.
The Strait of Hormuz, through which roughly a fifth of global oil flows, has been at the centre of the conflict. Iran had restricted passage for several weeks, contributing to rising prices and supply concerns.
Markets had been on edge ahead of Trump’s deadline for Iran to reach a deal, fearing disruptions to the Strait of Hormuz oil supply, a critical route for global energy trade.
Iran ceasefire announcement impacts oil markets
Oil prices had surged in recent weeks amid fears that the strait could be closed or severely restricted. The waterway handles shipments critical to global supply chains, including crude oil and liquefied natural gas.
Following the Iran ceasefire announcement, markets reacted immediately as the agreement includes restoring Strait of Hormuz navigation, easing supply chain risks.
The US-Israel-Iran conflict has been paused for two weeks after weeks of hostilities that disrupted energy markets.
While the ceasefire has helped stabilise sentiment, experts caution that a full recovery in supply chains depends on sustained peace and confidence among shipping operators.
Markets react to oil price fall
The sharp correction in global crude oil prices also boosted financial markets, with equities rallying globally as energy cost pressures eased.
Lower oil prices are expected to reduce inflationary pressures and support economic growth, especially for oil-importing countries.
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