Crude Oil Prices Plummet Following US-Iran Ceasefire Agreement

US-Iran Ceasefire Deal Sends Crude Oil Prices into Free Fall

The United States and Iran have agreed to a two-week ceasefire deal, which has led to a significant drop in crude oil prices. As part of the agreement, Iran has agreed to temporarily reopen the Strait of Hormuz, allowing safe passage of ships.

Brent crude oil price slipped 15.19% to $92.67 a barrel, while the US West Texas Intermediate (WTI) crude futures plunged 15.02% to $96.03 a barrel. The reopening of the Strait of Hormuz, which is expected to be coordinated with Iran's armed forces and with "due consideration of technical limitations," will allow for the safe passage of ships.

The Strait of Hormuz is a crucial waterway that transits about a fifth of the world's oil and liquefied natural gas. The near-closure of the Strait due to the US-Iran war has roiled energy markets, with WTI still up about 40% since the conflict started at the end of February.

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The curtailment of shipments is expected to leave more than 9 million barrels a day of oil output from key Middle Eastern producers shut in during April, according to a Bloomberg report citing US government estimates.

The ceasefire deal, which was brokered by Pakistan, also extends to the fighting in Lebanon between Israel and Hezbollah. US President Donald Trump has announced that he will hold off on his threat of attacks on Iran, subject to Iran reopening the Strait of Hormuz. The decision to hold off on attacking Iran is "subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz."