Trump agrees to a two-week ceasefire with Iran, causing oil prices to plummet over 15%

Investing.com- During Wednesday’s Asian trading session, after U.S. President Donald Trump agreed to a two-week ceasefire with Iran, oil prices plunged more than 15%. At the time the decision was announced, only a few hours remained before the final deadline he had set himself for reopening the Strait of Hormuz.

As of 19:38 U.S. Eastern Time (23:38 Beijing Time), U.S. West Texas Intermediate (WTI) crude futures fell 18% to $92.61 per barrel.

On Tuesday, upon delivery, WTI futures rose 0.3%, closing at $112.41 per barrel.

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In a social media post, Trump said he had agreed to pause military action against Iran for two weeks, with only a few hours left before his own self-set deadline of 8:00 p.m. U.S. Eastern Time.

He said the U.S. had achieved its core military objectives, adding that Iran had put forward a multi-pronged proposal that could serve as the foundation for a broader agreement.

Markets have been closely watching this deadline, as it is expected to mark a major escalation of the conflict. In the hours leading up to the deadline, oil prices surged to multi-month highs as investors worried that U.S. strikes could severely disrupt Middle East supply routes.

Earlier, Trump had warned that if Iran did not comply with the terms, it could lead to consequences where “all of civilization could perish.”

Trump described the ceasefire as a “bilateral pause,” with the condition that Iran ensure the immediate, safe reopening of the Strait of Hormuz, a crucial chokepoint that handles about one-fifth of global oil shipments.

This breakthrough came after last-minute diplomatic efforts, with Pakistan playing a key role as a mediator in urging both sides to step back from the brink of escalation.

Trump said that “most of the major issues” between the two sides had been resolved, and that the two-week window was intended to finalize a long-term solution.

The Strait of Hormuz handles about 20% of global oil traffic and, during weeks of conflict, has effectively been closed.

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