Global crude oil markets witnessed a sharp reversal on Wednesday, with prices plunging as much as 20 per cent after US President Donald Trump announced a two-week ceasefire with Iran, offering relief to energy markets rattled by weeks of disruption.
The development, which includes a commitment to restore navigation through the Strait of Hormuz, has eased fears of a prolonged supply shock in one of the world’s most critical energy corridors.
International benchmark Brent crude futures fell nearly 16 per cent, dropping $17.39 to $91.88, hitting an intraday low. Meanwhile, US WTI crude declined almost 20 per cent, falling $21.90 to $91.05, reported IANS.
The sharp correction comes after weeks of heightened volatility, during which oil prices had surged significantly amid fears of supply disruptions.
Why the Strait of Hormuz Matters
At the centre of the crisis is the Strait of Hormuz, a narrow but strategically vital waterway through which roughly one-fifth of global oil supply flows.
Iran had restricted passage through the strait for several weeks, triggering concerns over supply bottlenecks and pushing oil prices higher. The route is also critical for shipments of liquefied natural gas, making it a key artery for global energy trade.
Conflict Pauses After Weeks of Tension
The US-Israel-Iran conflict, which began in February, has now been paused for two weeks after around 40 days of hostilities.
President Trump’s announcement came just ahead of his earlier deadline for Iran to reopen the Strait of Hormuz or face potential strikes on its civilian infrastructure.
Iran, in turn, signalled that it would halt its military operations, provided attacks against it also cease. Foreign Minister Abbas Araghchi confirmed that safe passage through the Strait of Hormuz would be ensured for two weeks in coordination with Iranian armed forces.
From Surge to Sharp Correction
Oil prices had surged dramatically in March, rising by more than 60 per cent during the period, as markets priced in the risk of a prolonged disruption in energy supplies.
The ceasefire announcement has now triggered a sharp unwinding of those gains, as traders reassess supply risks.
Markets React: Equities Rally
The easing of geopolitical tensions also lifted investor sentiment in equity markets.
Indian benchmark indices rallied strongly, with the Sensex jumping nearly 4 per cent and the Nifty rising 3.5 per cent to their respective intraday highs in early trade.
The sharp rebound reflects renewed optimism among investors as immediate risks to global energy supplies appear to have eased.
What Lies Ahead?
While the ceasefire offers temporary relief, market participants remain cautious, given that the truce is limited to two weeks and dependent on both sides adhering to its terms.
The situation in West Asia continues to be closely watched, as any renewed escalation could once again disrupt supply chains and trigger volatility in global oil markets.
For now, the ceasefire has provided a breather, but uncertainty lingers, keeping traders, policymakers and investors on alert.
