Oil Prices Plunge Sharply After Resumption of Passage Through Hormuz During Two-Week Ceasefire

Oil prices experienced a significant drop at the beginning of Asian trading on Wednesday following an agreement between the United States and Iran for a two-week ceasefire. Iran announced that it would allow ships to safely pass through the Strait of Hormuz during this temporary truce, restoring a route that accounts for about one-fifth of global oil trade.

Iranian Foreign Minister Abbas Araghchi confirmed the safe passage through the strait for this period, while the Iranian Supreme National Security Council also confirmed the acceptance of the temporary ceasefire, emphasizing that this pause does not signify the end of the war. These developments mark a crucial step in reducing tensions in a region that has experienced significant upheaval due to military actions.

Negotiations are expected to commence in Islamabad on Friday, marking the first significant diplomatic move since the outbreak of conflict in February. These talks could represent an important milestone in the search for a peaceful resolution, as both sides seek to find a compromise in their demands.

According to AFP, the American benchmark oil West Texas Intermediate fell by 16.56% to $96.39 per barrel, while Brent crude dropped by 15.89% to $93.38. In the stock market, the Japanese index Nikkei 225 surged by 4.38% to 55,771.56 points, while the South Korean Kospi jumped by 5.71% to 5,808.65 points, as investors began to reallocate funds into riskier assets after weeks of volatility caused by the war.

The market relief followed a dramatic announcement from U.S. President Donald Trump, who stated that he would suspend bombings and attacks on Iran for two weeks if Tehran guarantees a 'complete, immediate, and safe' resumption of passage through the Strait of Hormuz. This announcement marked a pivotal moment in U.S.-Iran relations, which have been under significant strain in recent years.

Minutes after Trump's announcement, a senior White House official informed CNN that Israel also agreed to halt its bombing campaign while negotiations are ongoing. This could signal the potential for a broader peace process in the region, although many experts warn that the situation remains extremely tense.

At the same time, Iran withdrew from negotiations with the U.S. following threats from President Trump, who warned of the destruction of 'an entire civilization' if Tehran did not comply with his terms. Pakistan, which has become a key mediator between Washington and Tehran, called on Trump on Tuesday to extend the deadline for Iran to complete the blockade of oil supplies from the Persian Gulf. Pakistani Prime Minister Shehbaz Sharif stated that he requested Trump to allow more time for a compromise to avoid further escalation of the conflict.