Global crude oil prices saw a significant drop of up to 20% on Wednesday following US President Donald Trump’s announcement of a two-week ceasefire with Iran. This ceasefire includes a commitment to reopen navigation through the vital Strait of Hormuz, a key waterway in the world’s energy crisis.
The international benchmark Brent crude futures fell by nearly 16%, reaching $91.88, while US WTI crude dropped almost 20% to $91.05. The conflict over the Strait of Hormuz, responsible for about a fifth of global oil flows, had led to supply concerns and price hikes due to Iran’s restrictions on passage.
Oil prices had been rising due to fears of a potential closure or severe limitations on the strait. The strait is crucial for global supply chains, handling shipments of essential commodities like crude oil and liquefied natural gas.
President Trump’s decision to pause the US-Israel-Iran conflict for two weeks came just before his ultimatum to Iran to reopen the Strait of Hormuz or face significant strikes on its civilian infrastructure. Iran, in response, agreed to halt military actions if attacks against it ceased simultaneously, ensuring safe passage through the strait for the next two weeks.
The conflict had caused a sharp spike in oil prices in March, with gains exceeding 60% during that period. The development also had a positive impact on Indian equity markets, with both the Sensex and Nifty surging more than 3% in early trading.
