NEW YORK: Oil plummeted on Wednesday, falling below USD100 a barrel, on hope of the Strait of Hormuz reopening after US President Donald Trump agreed to a two-week ceasefire with Iran.
Brent crude futures settled USD14.52, or 13.29 percent, lower at USD94.75 a barrel, while US West Texas Intermediate (WTI) crude slid USD18.54, or 16.41 percent, to USD94.41 a barrel.
Oil prices fell in anticipation of the strait reopening and energy supplies that have built up being able to pass through the shipping route, said Andrew Lipow, founder of Lipow Oil Associates. Trump’s turnaround came shortly before his deadline for Iran to open the strait or face widespread attacks on its civilian infrastructure. About 20 percent of the world’s daily oil supply passes through the narrow waterway.
“This will be a double sided CEASEFIRE!” Trump wrote on social media after posting earlier on Tuesday that “a whole civilization will die tonight” if his demands were not met.
READ MORE: Oil tumbles below $100 after Trump announces two-week ceasefire
Trump said on Wednesday the US will work closely with Iran and will be talking about tariff and sanctions relief with Tehran.
“Overall, the market is hopeful more oil is going to reach the market… but it is still concerned that it is a very fragile ceasefire and it may not last,” Lipow said.
On Wednesday, Israel carried out its heaviest strikes on Lebanon since the conflict with Hezbollah broke out last month, even as the Iran-aligned group paused attacks on northern Israel and Israeli troops in Lebanon under the ceasefire.
Iran’s parliament speaker Mohammad Baqer Qalibaf said in a post on X that key clauses of a 10-point ceasefire proposal were violated even before US-Iran peace talks are set to start on Friday in Pakistan, adding that in such a situation a bilateral ceasefire or negotiations were unreasonable.
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