Oil slides after Trump agrees to conditional two-week Iran ceasefire

Oil Prices Drop Following Trump’s Conditional Ceasefire Agreement with Iran

President Donald Trump’s announcement of a two-week ceasefire with Iran has triggered a sharp decline in global oil prices. The benchmark Brent crude fell by roughly 15.9% to $92.30 per barrel, while US-traded oil dropped nearly 16.5% to $93.80. However, these levels remain above those seen prior to the conflict beginning on 28 February.

The recent surge in energy costs has been driven by disruptions in Middle Eastern oil and gas supplies, largely due to Iran’s threats to attack ships navigating the Strait of Hormuz. This comes in response to US and Israeli airstrikes, which Iran has sought to retaliate against.

Conditional Agreement and Threats

In a social media post late Tuesday, Trump stated: ‘I agree to suspend the bombing and attack of Iran for a period of two weeks… subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz.’

Trump had set a deadline for 20:00 EDT on Tuesday (00:00 GMT on Wednesday), warning that ‘a whole civilisation will die tonight’ if no agreement was reached. His threats underscore the urgency of the situation, yet his decision to pause hostilities suggests a strategic move to avoid further economic fallout.

Xavier Smith from AlphaSense highlighted that Trump may have been careful to prevent energy prices from rising sharply, as escalating the conflict could create a ‘self-inflicted economic wound’ that few would willingly accept. This caution is amplified by the pressure on his leadership from public approval ratings, which are under scrutiny as the situation unfolds.