Oil prices make stunning plunge and stock futures surge after Trump steps back with two-week ceasefire
Oil prices fell on Tuesday after Donald Trump announced a two-week ceasefire with Iran that will reopen the Strait of Hormuz.
After Trump posted about the outage on Truth Social, US crude oil fell 18 percent to below $93 per barrel after trading above $117 on the same day.
The declines mark the biggest one-day drop in oil prices since the Gulf War in 1991.
Following the news of the ceasefire, there was a significant decrease in the prices of natural gas and heating oil.
Brent crude oil futures fell nearly six percent to $103.40. Both prices are well above those at the beginning of the war.
Dow futures were up 1,000 points, Nasdaq 100 futures were up nearly three percent and S&P 500 futures were up more than 2.5 percent. NBC News reported.
In the bond market, Treasury yields fell on news of a possible ceasefire. The yield on the 10-year Treasury note fell to 4.24 percent from 4.30 percent earlier Tuesday.
That rate is still well above the prewar level of 3.97 percent, and the increase increased mortgage and other lending rates to U.S. households and businesses, which slowed the economy.
Oil prices fell on Tuesday after Donald Trump announced a two-week ceasefire with Iran that will reopen the Strait of Hormuz.
Aerial view of the coast of Iran and the island of Qeshm in the Strait of Hormuz
Shipping was almost halted in the Strait of Hormuz, a transit point in the Persian Gulf through which 20 percent of the world’s oil normally flows, causing oil prices to rise and the stock market to shake.
Trump said Iran has proposed a ‘workable’ 10-point peace plan that could help end the war that the US and Israel started on February 28.
Iran’s Supreme National Security Council announced that it had accepted a two-week ceasefire, and its foreign minister said passage through the strait would be allowed for the next two weeks under Iranian military rule.
Earlier, US stocks fluctuated sharply during normal trading as uncertainty over war with Iran grew after Trump threatened that ‘an entire civilization will die tonight and never be brought back’ if Iran does not have until 8pm Eastern to open the Strait of Hormuz.
Oil prices rose as the war disrupted crude oil production and transportation in the Persian Gulf.
Much of this oil leaves the Gulf through the Strait of Hormuz to reach customers around the world, but Iran has closed it off to enemies.
The concern in markets is that a long-term disruption would keep oil prices high for a long time and lead to a painful wave of inflation that would hit the global economy.
Trump kept traders on edge by making a series of threats to blow up Iranian power plants, only to delay several times.
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Should the USA trust Iran’s promises and relax, or is this ceasefire a risky move for global security?
A year ago, Trump backed off many of the tough tariffs he had initially threatened to impose on imports from other countries, but those duties have become higher than before his second term.
After previously creating fear of apocalypse by threatening to destroy Iran’s “entire civilization” if they did not reopen the Bosphorus, Trump posted on Truth Social, “I agree to suspend the bombing and attack on Iran for two weeks.”
The President said that after his meetings with Pakistani Prime Minister Shehbaz Sharif, he was assured that Iran would accept the ‘complete, immediate and safe opening of the Strait of Hormuz’.
“This will be a bilateral ceasefire,” Trump wrote. ‘The reason we are doing this is because we have already achieved and exceeded all military objectives and are well on our way to reaching a definitive agreement on long-term peace with Iran.’
Israel also agreed to halt attacks on Iran for two weeks and the ceasefire will go into effect when the Strait of Hormuz reopens, a senior White House official told Axios.
Iran accepted the Pakistan-brokered deal after China’s last-minute intervention forced Tehran to show flexibility over the economic impact of the war, three Iranian officials told the New York Times.
Iran’s 10-point plan, published by the state-run Tasnim news agency, demands that the United States accept Tehran’s continued control of the Bosphorus, recognize its right to enrich uranium, lift all sanctions, pay compensation and withdraw all its troops from the region.
