Oil Prices Drop on U.S.-Iran Ceasefire

U.S. crude oil prices plummeted 16% to $94.41 per barrel, their biggest one-day decline since April 2020, after the U.S. and Iran agreed to a two-week ceasefire. The agreement allows for safe passage through the Strait of Hormuz, a critical oil shipping lane. President Donald Trump said the ceasefire is subject to Iran agreeing to a complete and immediate opening of the strait, with Iranian Foreign Minister Seyed Abbas Araghchi confirming Tehran will allow safe passage via coordination with its Armed Forces. The sudden drop in oil prices marks a significant shift in market sentiment, driven by the reduced risk of supply disruptions in the Strait of Hormuz. This ceasefire agreement sets a precedent for future negotiations between the U.S. and Iran, potentially leading to a more stable oil market. The two-week ceasefire period will be closely watched, with markets awaiting signs of a breakthrough in tanker traffic. If the agreement holds, it could lead to a decrease in oil prices, making it essential to monitor the situation closely, especially ahead of the OPEC meeting on June 5, where production levels will be discussed.