- Brent crude dropped sharply to $95.068 after US paused strikes on Iran for two weeks
- US WTI crude fell nearly $20 per barrel amid hopes of reopening the Strait of Hormuz
- Markets reacted quickly with rising stocks, bonds, and easing oil supply fears
Brent crude fell sharply to $95.068 per barrel (from $109.77) on Wednesday after US President Donald Trump announced a two-week pause in strikes on Iran. US West Texas Intermediate (WTI) crude also fell by nearly $20 per barrel after the announcement. Follow Live Updates
The pause is linked to the immediate reopening of the Strait of Hormuz, a narrow waterway through which nearly one-fifth of the world's oil and gas moves every day.
Markets reacted within minutes -- oil fell, bonds rose, and US stocks jumped. Investors see the ceasefire as a sign that oil supplies may start flowing normally again after weeks of disruption.
Photo Credit: Trading Economics
Why Oil Had Surged
The US-Israeli attacks on Iran (since February 28) had pushed Tehran to effectively shut the Strait. Tankers avoided the route. Insurance costs jumped. Supply fears drove oil prices up more than 50 per cent in March, the steepest monthly rise on record.
High oil prices had begun feeding inflation fears across countries. Governments and companies were scrambling to adjust to the energy shock.
On Wednesday, Trump said a long-term peace agreement with Iran was "in progress" and that a 10-point proposal from the Islamic nation looked workable. Iran, in turn, said safe transit through the Strait could be ensured for two weeks if attacks stopped. The statements were enough for traders to unwind panic positions.
What Moved In Markets
| Asset / Indicator | Move | What it signals |
| Brent crude | Fell to $95.068 per barrel | Supply fears easing |
| WTI crude | Fell nearly $20 to around $94 | Sharp unwinding of risk premium |
| S&P 500 futures | Up over 2 per cent | Relief rally in equities |
| US 10-year Treasury futures | Up 15 ticks | Rush to safety reversing |
| Australian dollar | Up 1.3 per cent | Risk appetite returning |
| Euro | Up 0.76 per cent | Dollar losing safe-haven demand |
| Cryptocurrencies | Rose | Traders moving back to risk assets |
Why Strait Of Hormuz Matters So Much
The Strait of Hormuz is not just another shipping route. It is the main exit for oil from Saudi Arabia, the UAE, Kuwait, Iraq and Iran. Any disruption here quickly affects global prices.
Even the threat of closure is enough to move markets. With the Strait reopening, traders now expect tankers to resume movement. That reduces immediate supply risk.
Uncertainty Remains
It is important to mention that the ceasefire is only for two weeks, and it depends on coordination with Iranian armed forces. A long-term deal is still under negotiation.
Analysts say the relief may be temporary if talks fail. For now, though, markets are betting that the worst of the oil shock may be over.
