Oil plunges and stocks rally on US-Iran ceasefire

• Iran to open Hormuz for 2 weeks
• Trump: ‘This is a double-sided ceasefire’
• Analysts say a re-escalation is possible

Oil plunged on Wednesday to below $100 per barrel and stock markets worldwide rallied following a two-week ceasefire agreement between the US and Iran and a pledge by Tehran to reopen the Strait of Hormuz during that period.

Brent futures lost $14.51, or 13.3 percent, to $94.76 a barrel at 03:30 GMT, while West Texas Intermediate slid $17.16, or 15.2 percent, to $95.79.

US President Donald Trump said in a social media post that he had agreed to suspend attacks on Iran for two weeks, subject to Tehran agreeing to the complete, immediate and safe opening of the strait.

“This is a double-sided ceasefire,” he said. 

The announcement came less than two hours before Trump’s deadline for Tehran to reopen the waterway or face massive attacks on its civilian infrastructure.

Tehran has accepted Pakistan’s ceasefire proposal, with safe passage through the strait possible in coordination with the Iranian armed forces for two weeks, Iranian foreign minister Abbas Araghchi said. 

Israel has also agreed to halt attacks, a White House official confirmed.

The near-closure of the waterway, which normally handles a fifth of the world’s oil and liquefied natural gas, has rattled energy markets, with crude rising to $120 in March.

The key test is whether talks continue over the next two weeks and whether insurers and tanker operators regain enough confidence for traffic through Hormuz to resume normally, Reuters quoted Charu Chanana, chief investment strategist at Danish investment bank Saxo, as saying.

“That will determine whether this remains just a relief rally or starts to look more like a durable de-escalation,” he said.

The two-week window is narrow, trust between the parties is thin, and the gap between a temporary pause and a durable agreement remains wide, said Arth Malani, founder and CEO of NorthStar Insights, a global risk and communications agency. 

For Gulf economies, the uncertainty carries a cost that will not disappear just because the rhetoric has softened, he said.

Following the ceasefire announcement, markets around the globe jumped, with S&P 500 futures up over 2 percent. In Asia, Japan’s Nikkei stock index rose almost 5 percent, while South Korea’s Kospi climbed 6 percent, triggering a temporary halt in trading.  

Gulf stock markets fell on Tuesday; Saudi Arabia led with a 1.6 percent drop. Abu Dhabi and Dubai were down 0.3 and 0.8 percent, respectively.

Gold prices rose 3 percent to $4,800 per ounce by 03:30 GMT on Wednesday after the ceasefire announcement. Silver gained 6 percent to $76.38 per ounce.

Carol Kong, a currency strategist at Commonwealth Bank of Australia, told Reuters the conflict’s root causes remain unresolved, posing a risk of re-escalation.

“We maintain our view that the war will run into June. The implication is dollar losses may prove short-lived,” Kong said.

Further reading:

• US deal offers Qatar a golden pass for overseas LNG
• War means higher prices and slower growth, IMF says
• The old world of energy is being turned upside‑down