Ceasefire in the Strait: Oil Industry Braces for Change

Oil prices fell below $100 as President Trump and Iran agreed on a two-week ceasefire and potential reopening of the Strait of Hormuz. Investors sold oil amid hopes of de-escalation. Meanwhile, Iranian threats persisted, and oil supply was affected despite potential diplomatic progress.

Oil prices dropped below $100 a barrel following President Donald Trump's announcement of a temporary ceasefire with Iran, conditional on reopening the Strait of Hormuz. By 11:02 a.m. ET, Brent crude futures fell $14.83 to $94.44 a barrel, while WTI futures decreased by $17.92, reaching $95.03.

UBS analyst Giovanni Staunovo indicated investors are focused on de-escalation, leading to a sell-off in oil. The ceasefire announcement preceded Trump's ultimatum demanding Iran open the Strait or face widespread attacks. Approximately 20% of daily oil supply flows through this crucial waterway.

Attempts to pass the strait were met with destruction threats from the Iranian navy. As Iran considered reopening the Strait in coordination with armed forces, U.S. and Iranian officials prepared for talks in Pakistan. Discussions revolve around ensuring the safety of oil tankers and tackling shipping logistics under the ceasefire deal.

(With inputs from agencies.)