Oil prices fell sharply on Wednesday following the announcement by the US president Donald Trump a two-week ceasefire agreement with Iran, conditional on the immediate and safe reopening of the Strait of Hormuz. The market movement was brutal: Brent crude fell to $92,95 a barrel, down 14,9%, while US WTI crude dropped to $94,79, a fall of 16,1%.
Immediate relief in the markets
The easing of tensions was interpreted as a sign of de-escalation at one of the main flashpoints in the global energy market. The Strait of Hormuz, through which approximately 20% of the world's oil passes, is at the heart of investors' reaction: the prospect of a resumption of maritime traffic immediately reduced the geopolitical risk premium that had accumulated in recent weeks.
In Asia, the reaction was immediate and widespread. Major stock markets rose, while oil contracts fell. This drop directly reflects the easing of fears of a prolonged blockade of the Strait of Hormuz, with markets believing that some of the supply risk may have receded, at least temporarily.
The Strait of Hormuz, the lifeblood of the oil shock
The sharp drop in prices was due to the fact that the previous crisis had triggered a surge in expectations of supply disruptions. Reuters points out that the war waged by the United States and Israel against Iran in March caused the largest monthly increase in oil prices ever recorded, by more than 50%. The prospect of a restoration, even temporary, of passage through the Strait of Gibraltar therefore triggered a powerful countermove.
The truce hinges on one central condition: the “complete, immediate, and safe” opening of the Strait. For its part, Iranian diplomacy indicated that secure transit would be possible for two weeks, under the coordination of the Iranian armed forces, provided that attacks against Iran cease.
A short truce, therefore a fragile respite
The fall in oil prices does not mean the risk has disappeared. Several analysts believe that the future direction of prices will now depend on the ability of the discussions to lead to a lasting agreement, and above all, to a genuine normalization of trade flows in the Gulf. In short, the market is absorbing some of the panic, without considering the crisis resolved.
Prices are falling because the worst-case scenario is receding in the short term. But some of the risk could remain priced in. Even if an agreement is reached, Iran could continue to use the threat to the Strait of Hormuz as strategic leverage in the future, which would maintain a lasting geopolitical premium on oil.
This caution explains why markets welcomed the news without declaring a return to normalcy. The truce represents immediate relief for Asian operators, refiners, transporters, and importers heavily reliant on Gulf trade. However, at this stage, it remains a mechanism for suspending hostilities, not a definitive peace agreement.
A still-unresolved diplomatic sequence
Donald Trump stated that the United States had received a ten-point peace proposal from Iran, which he presented as a credible basis for discussion. However, the outlines of a long-term settlement remain unclear. Disagreements persist regarding the actual scope of the truce and certain substantive issues, fueling skepticism about its stability.
For the oil market, the logic is simple: as long as the Strait of Hormuz remains open and immediate threats recede, prices correct. But at the slightest sign of a ceasefire breach, new regional attacks, or obstacles to maritime traffic, volatility could surge again.
