Oil Prices Plunge as US, Iran Agree to 2-Week Ceasefire
AP Photo/Altaf Qadri
Oil prices fell sharply and U.S. stock futures surged Tuesday after President Trump delayed his threat of major attacks on Iran. U.S. crude oil futures dropped 18% to roughly $92.60 per barrel, while Brent crude futures declined about 6% to $103.40, according to the AP. Both remain significantly above pre-war levels. Futures for the S&P 500 climbed 2.4%, and Dow futures jumped 2.1%, adding more than 900 points, CNBC reports. Markets in Japan and South Korea also rose strongly, while Bitcoin increased over 5%, according to the Wall Street Journal.
Late Tuesday, President Trump announced he would hold off on strikes targeting Iranian bridges, power plants, and other civilian infrastructure, contingent on Tehran agreeing to a two-week ceasefire and reopening the Strait of Hormuz. Iran’s Supreme National Security Council confirmed acceptance of the ceasefire, and Foreign Minister Abbas Araghchi said passage through the strait would be allowed under Iranian military oversight for the next two weeks.
The conflict has disrupted crude oil production and transportation in the Persian Gulf, a key global oil route. Much of the region’s oil flows through the Strait of Hormuz, which Iran has previously blocked to certain countries. A regional official, speaking anonymously to the AP, said the ceasefire plan allows both Iran and Oman to collect fees from ships passing through the strait. Iran plans to use its share of the revenue for reconstruction; Oman’s use of its portion was not immediately clear. The strait lies within the territorial waters of both countries, though it had traditionally been treated as a toll-free international waterway.
About 20% of the world’s oil normally passes through the Strait of Hormuz in peacetime. Araghchi stated, “For a period of two weeks, safe passage through the Strait of Hormuz will be possible via coordination with Iran’s Armed Forces and with due consideration of technical limitations.” The AP notes that before the war, no such technical limitations were in place.
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