Oil price drops below $100 after Trump announces two-week ceasefire

Oil prices fell below $100 a barrel on Wednesday after US President Donald Trump announced an agreement with Iran for a two-week ceasefire, contingent on the immediate and safe opening of the Strait of Hormuz, Reuters reports, according to UNN.

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Brent crude futures fell $16.32, or 14.9%, to $92.95 a barrel by 06:30 GMT (09:30 Kyiv time), while WTI crude fell $18.16, or 16.1%, to $94.79 a barrel.

Trump's change of position came shortly before the deadline set for Iran: either it had to open the Strait of Hormuz, through which 20% of the world's oil passes, or face massive attacks on its civilian infrastructure.

"This will be a bilateral ceasefire!" he wrote on social media, after having posted earlier on Tuesday that "an entire civilization will die tonight" if his demands were not met.

Iran said it would cease its attacks if attacks on it ceased, and that safe transit through the Strait of Hormuz would be possible within two weeks in coordination with the Iranian armed forces, according to a statement by Foreign Minister Abbas Araghchi on Wednesday.

"The next direction for prices will depend on whether talks lead to a lasting agreement and a sustained normalization of supplies through the strait, with volatility likely to persist during negotiations later this week," ING commodity strategists said on Wednesday.

Several Persian Gulf countries detected missile launches and drone attacks or issued warnings to civilians to seek shelter.

"Even with a peace deal, Iran may dare to threaten the Strait of Hormuz more often in the future, and the market will price in an increased risk to the Strait of Hormuz going forward," said MST Marquee analyst Saul Kavonic.

The US-Israel war with Iran led to a sharp monthly increase in oil prices in March - by more than 50%.

"In the near term, there is still the potential for a significant geopolitical premium based on the details of a comprehensive agreement," Commonwealth Bank analyst Vivek Dhar noted in his memo.

Trump stated that the US had received a 10-point proposal from Iran, which he called a workable basis for negotiations, and said that the parties had made great progress towards a final agreement for long-term peace.

"This is a good start, and it could pave the way for a more permanent reopening, but much still needs to be resolved," said IG analyst Tony Sycamore.