Oil prices fell sharply on Wednesday with Brent crude and US West Texas Intermediate (WTI) crude both slipping below the $100 per barrel mark after President Donald Trump announced a two-week ceasefire with Iran, subject to the immediate reopening of the Strait of Hormuz.In the early hours of trade, Brent crude dropped 13.6 per cent to $94.43 per barrel, while WTI plunged over 14.3 per cent to $96.82 per barrel, Reuters reported. The fall in prices was recorded after Trump said that he had agreed to a temporary truce with Tehran, easing fears of a prolonged supply disruption through the Strait of Hormuz, a crucial passage through which nearly 20 per cent of the world’s oil supply passes.Markets reacted swiftly to the development, with oil posting its steepest decline in nearly six years, even as global equities surged on expectations of easing geopolitical tensions in the Middle East, according to Bloomberg. Trump’s announcement came just ahead of his stated deadline for Iran to ensure safe passage through the Strait or face potential attacks on its civilian infrastructure.In a series of posts on Truth Social, he described the agreement as a “double-sided ceasefire,” after earlier warning that “a whole civilization will die tonight” if conditions were not met.Iran, for its part, said it would halt its attacks if aggression against it stopped, adding that safe transit through the Strait of Hormuz would be facilitated for two weeks in coordination with its armed forces, according to Foreign Minister Abbas Araqchi.However, the situation on the ground remained tense, with several Gulf nations reporting missile launches, drone activity or issuing advisories urging civilians to take shelter.Analysts cautioned that while the ceasefire offers short-term relief, risks to oil supply remain elevated. “Even with a peace deal, Iran may be emboldened to threaten the Strait of Hormuz more frequently in the future, and the market will price in heightened risk to the Strait of Hormuz going forward,” MST Marquee analyst Saul Kavonic said.Echoing similar concerns, IG analyst Tony Sycamore highlighted that while the truce could pave the way for a more permanent reopening of the Strait, significant uncertainties remain.“It’s a good start and could pave the way to a more permanent reopening – but lots of ifs still to work out,” Sycamore said. The recent conflict between the US, Israel and Iran had already driven oil prices sharply higher, with March witnessing one of the steepest monthly surges on record, exceeding 50 per cent.
