Oil falls below $100 after Trump announces a ceasefire

Oil fell below $100 a barrel on Wednesday after US President Donald Trump announced his agreement to a two-week ceasefire with Iran, on the condition that the Strait of Hormuz be reopened immediately.

Brent crude fell $14.84, or 13.6 percent, to $94.43 per barrel, and US West Texas Intermediate crude fell $16.13, or 14.3 percent, to $96.82 per barrel, by 0023 GMT.

Trump’s change of heart came shortly before a deadline he set for Iran to open the Strait of Hormuz, through which 20 percent of the world’s oil normally passes, or face widespread attacks on its civilian infrastructure.

“This will be a ceasefire on both sides!” he wrote on social media, after threatening earlier on Tuesday that “an entire civilization will perish tonight” if his demands were not met.

Iranian Foreign Minister Abbas Araqchi said in a statement today, Wednesday, that his country will stop its attacks if the attacks on it stop, and that safe passage through the Strait of Hormuz will be possible for two weeks in coordination with the Iranian armed forces.

However, several Gulf countries monitored missile launches and drone attacks or issued warnings to civilians to take cover.

“Even with a peace agreement, Iran may dare to threaten the Strait of Hormuz more frequently in the future, and the market will take into account the increasing risks to the Strait in the future,” said Sol Cavonic, an analyst at MST Markey.

The US-Israeli war on Iran witnessed the largest monthly rise in oil prices in history, as they rose in March by more than 50 percent.

Trump said that the United States had received a 10-point proposal from Iran, which he described as a practical basis for negotiation, and added that the two parties had come a long way toward reaching a final agreement for long-term peace.

“It’s a good start and could pave the way for a more sustainable reopening – but there are still a lot of possibilities,” IG analyst Tony Sycamore said.

West Texas Intermediate crude maintained its price premium over Brent crude in a reversal of usual price patterns, because its futures contracts are for delivery in May, while Brent crude futures contracts are for delivery in June, because barrels with a closer delivery date achieve a higher price.