Oil prices plunged below $100 per barrel on Wednesday after U.S. President Donald Trump announced a two-week ceasefire agreement with Iran, tied to the immediate reopening of the Strait of Hormuz, a key global oil shipping route.
Global benchmark Brent crude dropped sharply while West Texas Intermediate also slid, as markets reacted to the prospect that oil supplies trapped by weeks of conflict could gradually return to the market.
Trump said the ceasefire would take effect if Iran ensured safe passage through the Strait of Hormuz, through which roughly 20% of the world’s daily oil supply normally passes.
Iran signaled it would halt attacks if strikes against it stopped, with Foreign Minister Abbas Araqchi saying limited and coordinated reopening of the waterway could begin within days.
Officials said U.S. and Iranian representatives are expected to meet in Pakistan to discuss broader negotiations aimed at securing a longer-term peace agreement.
Energy analysts said the deal could allow millions of barrels of crude previously stranded behind the Strait of Hormuz to re-enter global markets, easing supply fears that had driven prices sharply higher.
The conflict involving the United States, Israel and Iran had triggered one of the steepest monthly oil price surges on record, with prices jumping more than 50% amid fears of supply disruptions.
Despite the temporary truce, analysts warned that geopolitical risks around the Strait of Hormuz could remain elevated, meaning markets may continue to price in a security premium on oil.
Trump also said Washington had received a 10-point proposal from Tehran, describing it as a workable framework for negotiations and suggesting the two sides were moving closer to a lasting agreement.
He added that future talks could also include discussions on tariffs and sanctions relief as part of efforts to stabilize relations and global energy markets.