Oil slides after Trump agrees to conditional two-week Iran ceasefire

Oil slides after Trump agrees to conditional two-week Iran ceasefire

President Donald Trump’s decision to impose a temporary halt on military actions against Iran has triggered a sharp decline in global oil prices. The move comes with a key condition: Iran must allow unobstructed navigation through the Strait of Hormuz, a vital chokepoint for maritime oil traffic.

Benchmark Brent crude dropped nearly 16% to $92.30 per barrel, while US crude prices fell almost 16.5% to $93.80. Despite the drop, energy costs remain elevated compared to pre-conflict levels, which began on 28 February. The price surge was driven by Iranian threats to disrupt Middle Eastern oil and gas shipments, particularly targeting vessels in the Strait of Hormuz.

“I agree to suspend the bombing and attack of Iran for a period of two weeks… subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz,” Trump stated in a social media post.

Trump had set a deadline for 20:00 EDT on Tuesday, corresponding to 00:00 GMT on Wednesday, with a dire warning: “a whole civilisation will die tonight” if no agreement was reached. However, market analysts suggest Trump’s stance reflects a strategic balance between conflict and economic stability.

Xavier Smith of AlphaSense noted that Trump likely prioritized avoiding a price spike by prolonging the war. Such a scenario could create a “self-inflicted economic wound,” a risk few would take given the political pressures on his administration.