Oil quotations plummeted on Tuesday following President Donald Trump’s agreement to a two-week truce with Iran, sparking optimism that unimpeded passage through the vital Strait of Hormuz might soon resume for more oil tankers.
Nonetheless, experts cautioned that several uncertainties persist, including what adjustments might be made to the effective blockade of the strait, which facilitates roughly 20% of the world’s oil transit, and whether the ceasefire would lead to a lasting cessation of hostilities.
US crude futures dropped over 15% after hours, falling below $95 per barrel—a substantial reduction, yet still significantly higher than the $67.02 recorded on February 27th, prior to the conflict’s commencement. Brent crude futures, the global benchmark, saw a decline of 12.88%, settling at $95.12.
Concurrently, US equity futures and Asian markets surged. Dow futures advanced by more than 900 points, approximately 2%, S&P 500 futures gained 2.1%, and Nasdaq futures rose by about 2.5% in after-hours trading.
On Wednesday morning, Japan’s benchmark Nikkei 225 was up 4.9% as of 10:41 local time, while South Korea’s Kospi climbed 5.7%. Hong Kong’s Hang Seng index increased by 2.8%.
“The market was hungry for positive news, but it remains to be seen if the Strait of Hormuz will truly open,” Bob McNally, founder and president of Rapidan Energy Group, told CNN. “That’s the whole story, and so far, Washington and Tehran appear to be talking past each other on this front.”
While Trump celebrated on social media, Iran emphasized that the ceasefire was merely temporary. “This is not the end of the war, but all military branches must adhere to the Supreme Leader’s order and cease fire,” an announcement broadcast on state news channel IRIB stated.
Despite this, the surge in stocks and the dip in oil prices sent an “extremely clear” message, Art Hogan, Chief Market Strategist at B. Riley Financial, told CNN: “Investors want the Strait of Hormuz open and this conflict behind them.”
Trump agreed to the ceasefire less than two hours before his 8:00 PM Eastern deadline to destroy “an entire civilization.” He stipulated that the accord was contingent upon the reopening of the Strait of Hormuz.
“We received a 10-point proposal from Iran and believe it is a workable basis for negotiations,” Trump posted on Truth Social Tuesday evening.
The conflict in the Middle East—and the de facto closure of the crucial Strait of Hormuz—triggered the largest oil supply shock in history, affecting approximately 12–15 million barrels of crude oil daily. Both futures and physical oil markets had flashed severe warnings.
But whether the strait can simply return to normal operation remains an open question. Iran also claimed victory and asserted that its military would regulate passage through the Strait of Hormuz, thereby granting Iran a “unique economic and geopolitical status,” according to a statement from the Secretariat of Iran’s Supreme National Security Council.
The ceasefire “has actually clarified nothing regarding the strait,” Patrick DeHaan, Head of Petroleum Analysis at GasBuddy, tweeted Tuesday.
And the long-term ramifications will take time to materialize.
“In the near term, Iran’s ruling regime has (perhaps) solidified its political control and demonstrated its ability to bring global oil and gas markets to their knees…,” Carl Schamotta of Corpay Currency Research wrote in a note Tuesday evening.
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