Following the announcement of a ceasefire between the United States and Iran, international oil prices plummeted on Tuesday evening (April 7th). With U.S. President Trump agreeing to postpone the planned attack on Iran and Iran promising to open the Strait of Hormuz for safe passage of ships during the two-week ceasefire period, the market is currently closely watching whether this preliminary agreement can translate into long-term stability and peace.
The energy market also experienced intense volatility after the U.S. and Iran declared a ceasefire. As of 8:03 PM Eastern Time, U.S. West Texas Intermediate (WTI) crude oil futures for May plummeted over 16% to $94.47 per barrel. International benchmark Brent crude oil futures for June also fell by over 15% to $92.21 per barrel.
Since February 28th, when the U.S. and Israel took military action against Iran, disruptions in shipping through the Strait of Hormuz have caused the largest oil supply interruption in history. The resumption of shipping through the strait will alleviate global energy shortage pressures.
President Trump expressed on Truth Social that the two-week ceasefire agreement is premised on Iran agreeing to “comprehensively, immediately, and safely open the Strait of Hormuz.”
Trump noted that the U.S. has received a “ten-point agreement” proposal from Iran and views it as a feasible basis for negotiations. He stated, “Most of the major points of contention between the U.S. and Iran have been agreed upon, and these two weeks will allow for the finalization and conclusion of the agreement.”
Iranian Foreign Minister Seyed Abbas Araghchi later confirmed that, following coordination with the Iranian armed forces and consideration of technical limitations, passage through the strait will be allowed during the ceasefire period.
Araghchi emphasized, “If attacks against Iran cease, our strong armed forces will also cease defensive actions.”
The ceasefire agreement was reached less than two hours before the 8:00 PM deadline set by Trump.
It is reported that Pakistani Prime Minister Shehbaz Sharif and Army Chief Asim Munir played crucial mediation roles in the negotiations.
Sharif communicated separately with both the U.S. and Iran on Tuesday afternoon, urging both parties to delay actions to facilitate diplomatic negotiations scheduled to take place in the Pakistani capital, Islamabad, over the next two weeks.