Global energy markets witnessed a dramatic downturn and stock markets rallied Tuesday after the United States and Iran reached a conditional two-week ceasefire agreement that includes the reopening of the strategic Strait of Hormuz.
Benchmark Brent crude tumbled approximately 13% to $94.80 per barrel, while US-traded oil dropped more than 15% to $95.75, according to market data.
Despite the sharp decline, oil prices remain elevated compared to pre-conflict levels. Before hostilities began on February 28, crude was trading at around $70 per barrel.
The energy crisis had intensified after Iran threatened attacks on vessels attempting to use the strait in retaliation for US and Israeli airstrikes, severely disrupting Middle East oil and gas supplies.
Stock Markets Rally Worldwide
Asian markets led the global surge, with Japan’s Nikkei 225 climbing 5% and South Korea’s Kospi jumping nearly 6%. Hong Kong’s Hang Seng rose 2.8%, while Australia’s ASX 200 gained 2.7%.
European markets followed suit at opening. London’s FTSE 100 jumped 2.53%, France’s CAC advanced 4%, and Germany’s DAX rose nearly 5%. US futures also pointed to a higher open on Wall Street.
Trump Announces Deal on Social Media
Former President Donald Trump announced the agreement on social media Tuesday evening, stating he would “suspend the bombing and attack of Iran for a period of two weeks” contingent on Iran agreeing to the “COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz.”
Trump had set a deadline of 20:00 EDT Tuesday, warning that “a whole civilisation will die tonight” if no deal materialised.
Iranian Foreign Minister Abbas Araghchi confirmed Tehran’s position on social media, stating the country would agree to a ceasefire “if attacks against Iran are halted,” adding that safe passage through the strait “will be possible.”
Analyst: Trump Wary of Economic Fallout
Despite his强硬 rhetoric, Trump was likely cautious about allowing energy prices to “skyrocket” through further escalation, according to Xavier Smith, research director at market analysis firm AlphaSense.
Such a move could have created a “self-inflicted economic wound” that few would risk, particularly given the pressure of approval ratings on Trump’s leadership, Smith noted.
Long Road to Full Recovery
Analyst Saul Kavonic from financial services firm MST Marquee said that while more oil tankers stranded near the strait may now pass through during the ceasefire, providing some relief, full resumption of Middle East energy production remains unlikely until confidence in a lasting peace deal is established.
Kavonic added that damage to regional energy infrastructure could take months to repair. Iran has targeted energy and industrial facilities across the oil-rich region in retaliation for US-Israeli strikes.
According to research firm Rystad Energy, repairs could take years and cost more than $25 billion.
Asia Hit Hard by Conflict
Asian economies have been particularly devastated by the war’s economic fallout, given their heavy reliance on Gulf energy supplies.
The Philippines, which imports 98% of its oil from the Middle East, became the first country to declare a national energy emergency on March 24 after petrol prices more than doubled. Many regional airlines have raised fares and cut flights in response to surging jet fuel prices.
“The ceasefire is good news for Asian countries,” said Ichiro Kutani from Japan’s Institute of Energy Economics. “If it holds, oil prices will return to normal states, though this will take time.”
