Oil Plunges as US, Iran Ink Ceasefire Deal

Global oil prices fell sharply and major equity markets rallied on Wednesday after the United States and Iran reached a conditional two-week ceasefire tied to the reopening of the Strait of Hormuz, a key shipping route that had been disrupted by recent hostilities.

Brent crude, the international benchmark, dropped about 13% to $94.80 per barrel. U.S.-traded oil fell more than 15% to $95.75. Even after the decline, prices remained well above the pre-conflict level of around $70 per barrel on February 28.

The ceasefire framework was announced by the U.S. on Tuesday evening. Under the terms described, attacks on Iran would be suspended in exchange for the complete, immediate, and safe opening of the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi said Tehran would agree to the ceasefire if attacks against Iran stop, a condition he linked to enabling safe passage through the strait.

Stock markets responded quickly to the shift in perceived energy and supply risks. In Europe, London’s FTSE 100 rose 2.53%, France’s Cac gained 4%, and Germany’s Dax climbed nearly 5%. In Asia, Japan’s Nikkei 225 advanced 5% and South Korea’s Kospi jumped nearly 6%.

The conflict began on February 28 and had severely disrupted oil and gas supplies from the Middle East, pushing energy costs higher. The Strait of Hormuz is described as critical in the agreement, and its disruption was a central factor behind the surge in prices during the hostilities. The ceasefire, as presented by officials, is intended to restore safe transit and reduce immediate pressure on energy markets.

At the same time, analysts cautioned that a full recovery in energy production and flows may not be immediate. They pointed to infrastructure damage and the need for a durable peace arrangement as factors that could slow normalization even if shipping lanes reopen. Rystad Energy estimated that repairing damaged energy infrastructure in the region could cost more than $25 billion and take years.

The development is described as especially important for Asian economies that rely heavily on Middle Eastern energy imports. Those countries have faced significant economic strain from rising fuel prices and supply shortages during the conflict. The key uncertainty now is whether the ceasefire conditions hold for the full two-week period and whether safe, uninterrupted passage through the Strait of Hormuz is maintained as outlined in the agreement.