Oil prices drop sharply after Iran ceasefire as markets remain cautious
Published on •Updated
Oil prices have fallen sharply and Asian markets surged on Wednesday after the US and Iran agreed to a two-week ceasefire that includes reopening the Strait of Hormuz but traders are cautious so far until the truce proves durable.
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Brent crude stood at $92.99 per barrel as of Wednesday morning, up 28.30% since the war began in late February but well below the peaks of recent weeks which went up to $110 per barrel.
WTI crude sat at $94.70 per barrel, still 41.30% above pre-war levels despite the ceasefire-driven selloff. Wholesale gasoline was at $2.94 per gallon, also up more than 41% since the conflict began.
The moves follow a dramatic overnight plunge after US President Donald Trump said he was holding off on threatened strikes against Iranian bridges, power plants and other civilian infrastructure.
Iran’s foreign minister confirmed the Strait of Hormuz would be open to shipping for the next two weeks under Iranian military management.
Asia surges, Europe slides
Asian markets responded with enthusiasm. Japan’s Nikkei 225 gained 5.0% in early Wednesday trading, South Korea’s Kospi soared 5.9% and Hong Kong’s Hang Seng jumped 2.6%.
European markets told a different story. The Stoxx Europe 600 was down 6.82% in early trading, reflecting the accumulated damage from weeks of war-driven volatility rather than Wednesday’s ceasefire bounce — European markets having closed before the overnight news broke.
On Wall Street, the S&P 500 is down by 3.81% in pre-market US trading, having swung sharply during Tuesday’s session before clawing back losses after Pakistan’s prime minister urged Trump to extend his deadline and called on Iran to reopen the strait.
Cautious optimism
The ceasefire has done little to fully settle markets.
Attacks were still reported in Israel, Iran and across the Gulf region in the early hours of Wednesday, and neither side has specified when the truce formally begins.
The worry that has stalked markets since late February remains, namely that a prolonged disruption to Gulf oil flows will keep energy prices elevated long enough to push a fresh wave of inflation through the global economy — with or without a ceasefire.