Oil prices drop sharply after US-Iran ceasefire announcement

Global oil prices fell dramatically on Wednesday, slipping below the $100 mark after US President Donald Trump announced a temporary ceasefire agreement with Iran.

Brent crude dropped by more than 13 per cent, settling around $94 per barrel, while US West Texas Intermediate (WTI) declined over 15 per cent to nearly $95. The sharp fall reflects immediate market reaction to easing geopolitical tensions, particularly around the Strait of Hormuz, a critical route that carries roughly one-fifth of the world’s oil supply.

The decline came shortly after Washington signaled it would pause military action for two weeks, provided Iran ensures the safe reopening of the Strait. Tehran responded by indicating it would halt its own operations if attacks against it cease, and confirmed that controlled maritime passage could resume during the same period.

Despite the breakthrough, uncertainty remains. Reports from parts of the Gulf suggest ongoing security concerns, including alerts over missile and drone activity, highlighting the fragile nature of the ceasefire.

Analysts caution that while the agreement has reduced immediate supply fears, longer-term risks have not disappeared. Markets may continue to factor in a geopolitical “risk premium,” especially given concerns that tensions around the Strait of Hormuz could resurface.

The recent conflict had already pushed oil prices sharply higher, with March seeing one of the steepest monthly increases on record. While the ceasefire has provided short-term relief, experts say much will depend on whether upcoming negotiations lead to a durable and comprehensive agreement.

For now, the market response signals cautious optimism, but not complete confidence, as traders watch closely for further developments.