Oil prices fell sharply and global stock markets surged on Wednesday after the United States and Iran agreed to a two-week ceasefire that will see Tehran temporarily reopen the vital Strait of Hormuz. The waterway, through which about a fifth of the world’s oil and gas passes, had been closed for more than five weeks amid escalating conflict.
U.S. President Donald Trump announced the suspension of attacks for two weeks, saying he had received a “workable” 10-point proposal from Iran. Tehran later confirmed it had agreed to ensure safe passage through the strait.
The market reaction was immediate and dramatic. U.S. crude futures dropped around 15% to $96.31 a barrel, while Brent crude fell 13% to $94.71. Asian markets rallied strongly, with Japan’s Nikkei up 5.4% and South Korea’s KOSPI jumping 6%, triggering a brief trading halt. European and U.S. futures also rose sharply, while the U.S. dollar fell as investors moved away from safe-haven assets.
The ceasefire brought relief to energy-importing nations in Asia, where governments had introduced measures to cushion the impact of rising fuel costs. Analysts noted that lower oil prices would ease inflation pressures and support risk sentiment across the region.
Trump had earlier threatened severe consequences if the strait remained closed, vowing to strike Iranian infrastructure. Iran warned it would cut off oil and gas supplies to the U.S. and its allies for years if attacked. The temporary truce now opens the door for negotiations toward a longer-term peace agreement in the Middle East.
Middle East stock markets also rallied, with Dubai’s index rising 8.5% and Abu Dhabi climbing more than 3%. Gold prices edged higher, while Bitcoin gained as investors reassessed risk in the wake of the diplomatic breakthrough.
The ceasefire marks a significant de-escalation in a conflict that had rattled global markets and heightened geopolitical tensions. With negotiations set to continue over the next fortnight, attention will focus on whether the parties can translate this pause into a durable resolution.
