Ceasefire between US and Iran sends WTI oil prices below $95 a barrel

Prices for US West Texas Intermediate (WTI) light crude fell below $95 a barrel less than an hour after the United States and Iran announced a two-week ceasefire. The decline was more than 15 percent, US broadcaster CNN reported. On Tuesday, WTI was trading at around $117 a barrel.

Trump made the ceasefire conditional on the opening of the Strait of Hormuz, which Tehran agreed to, according to Iranian Foreign Minister Abbas Araghchi. Araghchi also said, according to AFP, that passage through the Strait of Hormuz would be permitted over the next two weeks "in coordination with the Iranian armed forces and with due consideration for technical limitations."

The US president announced he was ready to negotiate a ceasefire less than two hours before his ultimatum was due to expire, by which time Tehran was supposed to reach an agreement with the United States. On Tuesday, Trump threatened to destroy "an entire civilization" if Iran did not agree to a deal.

The United States and Israel launched strikes against Iran on 28 February, igniting a regional war. In retaliation, Tehran and its allies began attacking not only Israel and US military sites in the Middle East with drones, ballistic missiles and rockets, but also civilian targets, including oil infrastructure in neighbouring Arab countries. As a result of Iran’s effective blockade of the Strait of Hormuz, a key waterway for exports of oil and natural gas from the Persian Gulf, prices for these commodities rose sharply on global markets.