Oil Prices Plummet Following News of Ceasefire Between the U.S. and Iran, Brent Falls Below $95 per Barrel

Oil prices experienced a significant decline of over 10% on Wednesday morning, driven by news of a temporary ceasefire between the United States and Iran. As of 8:00 AM, the price of June Brent crude oil futures on the London ICE Futures exchange fell by $14.31 (13.1%), settling at $94.96 per barrel. This decline follows a modest decrease of $0.5 (0.5%) from the previous day, where the contract was priced at $109.27 per barrel.

Meanwhile, May WTI crude oil futures on the New York Mercantile Exchange (NYMEX) plummeted by $16.2 (14.34%), bringing the price down to $96.75 per barrel. In the previous trading session, these contracts had seen a slight increase of $0.54 (0.5%), closing at $112.95 per barrel.

U.S. President Donald Trump announced the cessation of strikes against Iran for a period of two weeks in exchange for the full and immediate reopening of the Strait of Hormuz. He emphasized that Iran would also suspend its attacks, stating, “This will be a mutual ceasefire.”

The Iranian Supreme National Security Council confirmed its agreement to the ceasefire with the United States, as reported by the Islamic Republic's Foreign Minister Abbas Araghchi. This development comes after Trump had previously threatened “the destruction of civilization” if Iran did not comply with the deadline to reopen the Strait of Hormuz.

According to Araghchi’s statement, safe passage through the Strait of Hormuz “will be possible in coordination with the Iranian Armed Forces and considering technical limitations” over the next two weeks. He noted that this agreement marks a positive beginning that could lay the groundwork for a long-term reopening of the strait, although he acknowledged that many issues still need to be resolved between the parties.

Analyst Tony Sycamore from IG commented, “This is a good start that could lay the foundation for a long-term opening of the strait, but the parties still have many issues to resolve.”

However, MST Marquee analyst Sol Kavonic warned that even with the ceasefire in place, Iran may pose a more frequent threat to shipping in the Strait of Hormuz in the future, indicating that the market will remain vigilant regarding the increased risk of such threats going forward.

In addition to the geopolitical developments, the American Petroleum Institute (API) reported a rise in domestic oil reserves, which increased by 3.72 million barrels over the past week. The API gathers information from operators of refineries, oil storage facilities, and pipelines on a voluntary basis. The U.S. Department of Energy is set to release its oil inventory data on Wednesday at 5:30 PM. Analysts surveyed by Trading Economics expect this data to indicate a decrease in inventories by 1 million barrels.