Global oil prices have dropped sharply and stock markets surged following a conditional two-week ceasefire agreement between the United States and Iran, which includes reopening the strategic Strait of Hormuz.
Benchmark Brent crude fell roughly 13% to $94.80 per barrel, while US-traded oil dropped more than 15% to $95.75. Despite the decline, prices remain above pre-conflict levels, when Brent traded around $70 per barrel.
The volatility followed disruptions in Middle Eastern oil and gas supplies after Iran threatened attacks on ships navigating the strait in response to US and Israeli airstrikes.
Financial markets reacted positively: London’s FTSE 100 opened 2.53% higher, France’s CAC rose 4%, and Germany’s DAX climbed nearly 5%. In Asia, Japan’s Nikkei 225 gained 5%, South Korea’s Kospi surged nearly 6%, Hong Kong’s Hang Seng rose 2.8%, and Australia’s ASX 200 increased 2.7%. US stock futures also indicated a higher opening.
President Donald Trump confirmed the ceasefire in a social media post, stating that the US would suspend attacks for two weeks, provided Iran ensures the “complete, immediate, and safe opening” of the strait. Iranian Foreign Minister Abbas Araghchi added that Tehran would agree to the ceasefire if attacks against the country stopped, allowing secure passage for vessels.
Analysts note that while the ceasefire may ease market pressures, full energy production in the Middle East will likely take months to resume due to infrastructure damage. Research by Rystad Energy estimates repairs could take years and cost over $25 billion. Previous attacks, such as on Qatar’s Ras Laffan industrial hub, have already reduced liquefied natural gas exports by 17%, with recovery expected to take up to five years.
Countries in Asia, heavily reliant on Gulf energy, have been particularly affected. The Philippines declared a national energy emergency in March after petrol prices more than doubled, while airlines across the region raised fares and reduced flights. Experts suggest the ceasefire could gradually stabilize oil prices, though normal levels may take time to return.
