Oil Prices Drop After Iran Ceasefire

Oil prices plunged Wednesday after President Donald Trump agreed to suspend attacks on Iran for two weeks in exchange for Tehran allowing safe passage through the Strait of Hormuz. U.S. West Texas Intermediate futures with May delivery fell about 15% to $95.62 per barrel by 11:37 a.m. ET. This sharp decline could log its worst daily performance since April 27, 2020, if it settles more than 14.52% lower.

The move marks a significant shift in the ongoing tensions between the US and Iran, as the agreement has the potential to alleviate supply chain concerns and reduce the risk of further conflict. The two-week ceasefire is subject to Iran agreeing to a complete, immediate and safe opening of the Strait of Hormuz, a critical waterway for global oil trade.

The ceasefire agreement will be closely watched in the coming weeks, with the US receiving a 10-point proposal from Iran that is a workable basis for negotiations. The situation is expected to unfold further by the end of the two-week period, with the potential for a more permanent agreement or a return to heightened tensions.