Oil prices plummet after US, Iran announce Hormuz reopening during two week ceasefire
Investors welcome US President Donald Trump’s ceasefire announcement and Iran’s statement that it will allow ships to pass through the Strait of Hormuz; This could ultimately mean lower gas prices for drivers.
Within 20 minutes of the president’s post on Truth Social at Wednesday morning AEST, the price of West Texas crude oil, which was around US$108 ($153) per barrel, fell more than 15 per cent. It is currently around $96 ($136) per barrel.
This situation will not be reflected in oil prices immediately, but it is expected to bring relief if it lasts for a long time.
In response to Trump’s two-week ceasefire, Iranian Foreign Minister Seyed Abbas Araghchi announced that “safe passage through the Strait of Hormuz will be possible through coordination with the Iranian armed forces and due consideration of technical limitations.”
There was also a big change in the foreign exchange markets. For example, the Australian dollar rose by more than a percentage point. Before Trump’s message, the rate was below 70 cents, but it is now 70.6 cents.
As investors now began to focus on the effects of a possible end to the war, the value of commodities such as gold and silver increased.
More to come.
Shane Wright is senior economic correspondent for The Age and The Sydney Morning Herald.Connect with: X or email.
