Washington: Oil prices dropped sharply after US President Donald Trump said he would pause planned military strikes on Iran for two weeks, easing fears of a wider conflict in the energy-rich Gulf region.
US crude futures fell below $100 a barrel, reversing recent gains driven by weeks of tensions around the Strait of Hormuz, a key global oil transit route, The Wall Street Journal said on Tuesday (Local time).
The decline followed Trump’s announcement that he would suspend attacks on Iran, subject to Tehran reopening the strait, according to the Journal.
Stock markets also reacted positively. Futures tied to major US indexes rose more than 2 per cent, signalling investor relief after days of volatility linked to the crisis, it reported.
“Stock futures are surging and oil prices falling after President Trump posted on Truth Social that he would suspend attacks on Iran for two weeks,” the report said.
The Strait of Hormuz, through which roughly a fifth of global oil flows, has been at the centre of the conflict. Iran had restricted passage for several weeks, contributing to rising prices and supply concerns, according to reports by The Hill.
Markets had been on edge ahead of Trump’s deadline for Iran to reach a deal, with traders fearing a major escalation could disrupt shipments across the Gulf and send prices sharply higher, the Journal noted.
Instead, the announcement of a potential ceasefire triggered a broad rally across global markets. Asian stocks also climbed, with Japan’s Nikkei and South Korea’s Kospi advancing after the news.
Investors had largely treated Trump’s earlier threats as negotiating tactics. “Some investors had bet that Trump… could extend the deadline to reopen the Strait of Hormuz, something he has done multiple times in the past month,” the daily reported.
Oil prices had surged in recent weeks amid fears that the strait could be closed or severely restricted. The waterway handles shipments critical to global supply chains, including crude oil and liquefied natural gas.
The easing of tensions also lifted other asset classes. Gold prices rose, reflecting continued uncertainty, while equities gained as the risk of immediate conflict receded, according to the Journal.
However, analysts cautioned that the situation remains fragile. The proposed two-week ceasefire depends on Iran agreeing to fully reopen the strait and on both sides refraining from further escalation.
Even after the announcement, reports of missile and drone activity in parts of the Gulf raised questions about how durable the pause would be, according to The New York Times.
The broader conflict has already disrupted energy markets for weeks. Limited shipping access and uncertainty over supply have driven price swings and heightened volatility across global markets.
The two-week window now offers a chance for diplomacy to stabilise the situation, but traders remain wary of sudden shifts in policy or military action.
The Strait of Hormuz remains one of the world’s most critical energy chokepoints. Any disruption can have immediate global consequences, particularly for large importers.
For India, which relies heavily on crude imports from the Gulf, sustained volatility in oil prices could impact inflation, currency stability and overall economic growth.
(IANS)
