Oil prices plunged on Wednesday after President Donald Trump agreed to halt attacks on Iran for two weeks in exchange for allowing Tehran safe passage through the Strait of Hormuz.
us west texas intermediate Futures prices for May delivery were down about 18% to $92.50 a barrel by 8:48 a.m. ET. international benchmark brent crude oil Futures prices for June delivery fell more than 16% to $91.25 a barrel.
If WTI settles more than 14.52% lower, it could mark its worst daily performance since April 27, 2020.
President Trump said the two-week ceasefire is conditional on Iran agreeing to fully, immediately and safely open the Strait of Hormuz. He said the United States had received a 10-point proposal from Iran that provided a viable basis for negotiations.
“The United States and Iran have reached an agreement on nearly all of the issues of the past, and the agreement will be finalized and signed over a two-week period,” President Trump said in a social media post.
Iranian Foreign Minister Seyyed Abbas Araghchi said Iran would allow safe passage through the strait during the ceasefire period through “coordination with the Iranian Armed Forces and due consideration of technical limitations.”
“If the attacks against Iran are stopped, our powerful military will cease defensive operations,” Araghchi said in a social media post.
The apparent ceasefire came less than two hours before President Trump’s Tuesday 8pm ET deadline for Iran to reopen the strait. The president had threatened to bomb all bridges and power plants in Iran if leaders did not meet the deadline.
President Trump’s rhetoric took an ominous turn Tuesday morning when he threatened to destroy entire Iranian civilization.
“Tonight, an entire civilization will perish and will never rise again,” President Trump said in a social media post early Tuesday. “I don’t want that to happen, but it probably will.”
The president said he agreed to the ceasefire after discussions with Pakistani Prime Minister Shehbaz Sharif. The prime minister had asked President Trump to extend the deadline to allow negotiations to continue. Sharif also called on Iran to reopen the strait during that period as a goodwill measure.
Iran’s attacks on commercial ships caused oil exports through the strait to plummet, causing the largest oil supply disruption in history.
Until the United States and Israel attacked Iran on February 28, about 20% of the world’s oil supplies passed through the strait. This narrow sea route connects producers in the Persian Gulf with global markets.
During the war, the prices of crude oil, jet fuel, diesel, and gasoline soared. Oil company CEOs and analysts have warned that fuel shortages will spread around the world if the strait does not fully reopen.
