Crude oil prices plunge after Trump announces two-week truce with Iran

Crude oil prices fell below $100 a barrel on April 8 after US President Donald Trump announced that he had reached an agreement with Iran for a two-day ceasefire on the condition that the Strait of Hormuz be reopened immediately and safely, Reuters reported.

Brent futures fell $14.51, or 13.3%, to $94.76 a barrel by 03:30 GMT, while WTI fell $17.16, or 15.2%, to $95.79 a barrel.

Trump’s shift in stance came shortly before a deadline set for Iran to reopen the Strait of Hormuz. The US president had threatened to destroy Iranian civilian targets if it did not.

“Even if a peace deal is reached, Iran may feel more emboldened to put forward additional conditions on the Strait of Hormuz. So the market will continue to factor in such risks,” said MST Marquee analyst Sol Kavonik.

The armed conflict between the US and Israel with Iran caused the fastest monthly increase in crude oil prices in history in March, by more than 50%.

“A significant geopolitical premium is still possible in the near term, which will be fixed depending on the details of a large-scale agreement,” said Commonwealth Bank analyst Vivek Dhar.

WTI maintained its price advantage over Brent, which is the opposite of the usual market order, as its contract is for delivery in May, while Brent is for delivery in June. This reflects the higher cost of barrels with a shorter delivery period.

“This is a good start that could pave the way for a stable opening of Hormuz, but there are still many “ifs” that need to be resolved,” noted IG analyst Tony Sycamore.

As reported, US President Donald Trump said that he had agreed to suspend the bombing of Iran for two weeks. According to Trump, such a decision became possible after consultations with the Pakistani leadership and the receipt of a ten-point proposal from Iran.

The American side considers this document as the basis for further negotiations. The two-week pause should give the parties time to finalize the agreements. The US emphasizes that most of the controversial issues have already been resolved, and the new stage may become decisive for the settlement of the protracted conflict.

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