Oil fell below $100 per barrel on Wednesday after U.S. President Donald Trump said he had agreed to a two-week ceasefire with Iran, subject to the immediate and safe reopening of the Strait of Hormuz.
Brent fell $14.84, or 13.6%, to $94.43 a barrel, and WTI slid $16.13, or 14.3%, to $96.82 a barrel as of 0023 GMT.
Trump’s turnaround came shortly before his deadline for Iran to open the Strait of Hormuz, where 20% of the world’s oil transits, or face widespread attacks on its civilian infrastructure.
“This will be a double-sided ceasefire!” he wrote on social media, after posting earlier on Tuesday that “a whole civilisation will die tonight” if his demands were not met.
Iran said it would halt its attacks if attacks against it stopped and that safe transit through the Strait of Hormuz would be possible for two weeks in coordination with Iranian armed forces, according to a statement by Foreign Minister Abbas Araqchi on Wednesday.
However, multiple Gulf states have identified missile launches and drone attacks or issued warnings to civilians to take shelter.
“Even with a peace deal, Iran may be emboldened to threaten the Strait of Hormuz more frequently in the future, and the market will price in heightened risk to the Strait of Hormuz going forward,” MST Marquee analyst Saul Kavonic said.
The U.S.-Israeli war with Iran saw the steepest monthly oil price rise in history in March of more than 50%.
Trump said the U.S. had received a 10-point proposal from Iran, which he called a workable basis to negotiate, and said the parties were very far along on reaching a definitive agreement for long-term peace.
“It’s a good start and could pave the way to a more permanent reopening – but lots of ifs still to work out,” IG analyst Tony Sycamore said.
WTI has maintained its price premium over Brent, reversing typical price patterns, due to its May delivery contract, while Brent is for June, reflecting that barrels with an earlier delivery date are commanding a higher price.
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