Global markets reacted to news of a two-week ceasefire in Iran with a sharp drop in oil and petroleum product prices. By the morning of Wednesday, April 8, Brent crude futures were hovering around $95 per barrel, having traded at approximately $110 the day before.
According to Trading Economics, crude oil lost 14% of its value on global markets within 24 hours, trading at $96 per barrel. Heating oil, widely used as home fuel in the United States, fell by 17% in a single day, while gasoline dropped by nearly 10%.
The world awaits the reopening of the Strait of Hormuz
The collapse in oil sector prices is a clear market reaction to reports of a two-week ceasefire in the US-Israeli war against Iran and the likely imminent lifting of Iran's blockade of the Strait of Hormuz — one of the most critical arteries for oil exports from the Persian Gulf region to the rest of the world.
On the evening of April 7, just hours before the expiration of the ultimatum that US President Donald Trump had previously issued to Iran — threatening the "death of an entire civilization" — the White House announced its intention to halt attacks on the Islamic Republic, provided Tehran in turn ceased attacks on vessels passing through the Strait of Hormuz. Trump said the decision came at the request of Pakistan, which is serving as an intermediary between the US and Iran.
Iranian Foreign Minister Abbas Araghchi confirmed that the armed forces would halt "defensive operations" if the country is not attacked by its adversaries. "For two weeks, safe passage through the Strait of Hormuz will be possible in coordination with Iran's Armed Forces and subject to technical limitations," Araghchi stated.
Israel also endorsed the ceasefire, according to the office of Prime Minister Benjamin Netanyahu.
The US-Israeli war against Iran
The United States and Israel have been conducting airstrikes against Iran since February 28, killing Supreme Leader Ayatollah Ali Khamenei along with a number of senior officials and security figures. Khamenei has been succeeded by his 56-year-old son Mojtaba, who has not appeared in public or in video addresses since the start of hostilities.
In response to the attacks by both countries, Iran has been striking Israel and American bases in Persian Gulf states with missiles and drones. Iran has also targeted oil storage facilities in several Gulf countries and oil tankers transiting the Strait of Hormuz. The blockade of the strait proved a serious test for Trump, who failed both in threatening Iran and in drawing NATO allies into resolving the crisis he had helped create.
-14% in one day: why did oil markets crash after the US-Iran ceasefire?
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