Oil slides after Trump agrees to conditional two-week Iran ceasefire

Oil Prices Drop Following Conditional Ceasefire Agreement

President Donald Trump’s conditional two-week ceasefire with Iran has triggered a notable decline in global oil prices. The benchmark Brent crude saw a 15.9% drop, reaching $92.30 per barrel. US-traded oil also fell, declining by approximately 16.5% to $93.80. However, prices remain above pre-conflict levels, which began on 28 February.

Strait of Hormuz as Key Factor

The energy market’s volatility stems from Iranian threats to block the Strait of Hormuz, a vital passage for oil and gas shipments from the Middle East. This disruption has caused energy costs to rise sharply, as tensions escalated over US and Israeli airstrikes. Trump’s agreement to pause attacks on Iran hinges on Iran’s commitment to fully and safely open the strait.

“I agree to suspend the bombing and attack of Iran for a period of two weeks… subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz,” Trump stated in a social media post.

Trump had set a deadline for 20:00 EDT on Tuesday, warning that “a whole civilisation will die tonight” if no deal was reached. Despite his firm stance, analysts suggest he may be cautious about allowing prices to rise further. Xavier Smith from AlphaSense noted that escalating the conflict could result in a “self-inflicted economic wound,” a risk few would take, especially with public approval ratings under scrutiny.