Oil Drops 15%, Stocks Rally on Trump’s Ceasefire Deal with Iran

Global markets reacted sharply after US President Donald Trump stepped back from imminent military action against Iran, instead tying a suspension of strikes to Tehran’s agreement to a temporary ceasefire and the reopening of the Strait of Hormuz. Within minutes of the announcement, oil prices tumbled, falling by nearly 15 percent, while equities surged across Asia. The shift came just over an hour before Trump’s deadline expired, with the US leader saying he would hold off on attacks provided Iran accepted a two-week truce. Shortly afterward, Iran’s National Security Council confirmed it had agreed, on the condition that all strikes against its territory cease, and said talks with Washington would begin in Islamabad on Friday.

Tehran also signaled a limited reopening of the Strait of Hormuz, one of the world’s most critical energy chokepoints. The country’s foreign minister indicated that shipping would be allowed to pass for the next two weeks under military supervision. Even so, uncertainty remains over what happens after that window closes, and whether safe passage can be sustained. Markets responded immediately but remain cautious, with the outcome of the negotiations and the longer-term management of the strait still unclear.

The oil market saw one of its sharpest reversals since the conflict began. Brent crude dropped 14.4 percent to 93.48 dollars per barrel, while US crude futures slid 14.7 percent to 96.27 dollars. Despite the steep decline, both benchmarks are still significantly higher than before the war erupted. The rally in equities was equally striking. Japan’s Nikkei 225 rose by 5 percent, South Korea’s Kospi jumped 5.9 percent, and Australia’s S and P ASX 200 gained 2.6 percent. Hong Kong’s Hang Seng climbed 2.6 percent, while the Shanghai Composite added 1.7 percent.

Bond markets also reflected a shift toward reduced immediate risk. Yields on US Treasuries moved lower, with the 10-year note easing to 4.24 percent from 4.30 percent earlier in the day. At the same time, gold prices advanced by more than 2 percent to reach 4,812 dollars per ounce, indicating that investors are still hedging against uncertainty. Digital assets followed the broader risk-on trend, with bitcoin rising 2.9 percent to 71,327 dollars and ether gaining 5.6 percent to 2,234 dollars.

Analysts cautioned that the ceasefire represents only a temporary reprieve rather than a resolution. Saul Kavonic of MST Financial described the pause as “an off-ramp for Trump’s overly bombastic ultimatum, but not yet an off-ramp for oil markets or the war.” He noted that while some oil and liquefied natural gas shipments stranded near the Strait of Hormuz could now move, this would not translate into increased production. “This does not result in more production, just a release of storage on water,” he said, adding that meaningful recovery in supply would depend on confidence in a lasting ceasefire.

Others pointed to the role of market sentiment and logistics. Charu Chanana of Saxo said the key question is whether negotiations maintain momentum and whether insurers and tanker operators regain enough trust to resume normal activity through the strait. “That will determine whether this remains just a relief rally or starts to look more like a durable de-escalation,” she explained. Similarly, TD Securities strategist Prashant Newnaha warned that renewed escalation cannot be excluded, even as markets currently treat the truce as credible. He added that all sides are likely to present the ceasefire as a major success, while cautioning that oil prices are unlikely to return to pre-war levels, keeping inflation concerns in focus.

Earlier in the day, US stock markets had shown signs of volatility, with the S and P 500 falling by as much as 1.2 percent before reversing course late in the session. The turnaround came after Pakistan’s prime minister urged Trump to extend his deadline and called on Iran to reopen the Strait of Hormuz for the same two-week period, paving the way for the eventual announcement.

The backdrop to these developments remains a conflict that has significantly disrupted global energy flows. Since US and Israeli strikes on Iran at the end of February, oil prices have climbed sharply, driven in large part by Tehran’s near closure of the Strait of Hormuz. The waterway typically carries around one fifth of the world’s oil and liquefied natural gas, making any disruption a major driver of global energy prices and market instability.