West Texas Intermediate (WTI) crude oil prices experienced a sharp decline on Wednesday, falling more than 15% from Tuesday’s highs above $106.00 to consolidate around $90.00 following the announcement of a two-week ceasefire in the Iran war [1]. The ceasefire agreement, reached late Tuesday between the US and Iran, includes Tehran's promise of safe passage for oil and gas vessels through the Strait of Hormuz, a critical gateway for global energy supplies [1]. Despite the deal, reports of rocket attacks in Gulf countries persist, highlighting the fragile nature of the agreement, though optimism remains for a more stable peace deal [1].
US President Trump declared a “total and complete victory” in the negotiations, while the Iranian National Security Council revealed that direct talks with the US are scheduled to begin on Friday in Islamabad, Pakistan, using Tehran’s 10-point proposal as the starting point [1]. From a broader perspective, WTI prices remain nearly 40% above pre-war levels, indicating continued investor caution regarding the durability of peace in the volatile Gulf region and the ongoing impact of damaged oilfields on supply [1].
Last weekend, OPEC+ agreed to increase their output quotas by 206,000 barrels per day starting May 1. However, the market has responded with skepticism due to the closure of the Hormuz gateway, though this decision could provide additional relief if peace negotiations progress successfully [1].
Overall, while the ceasefire has led to a significant sell-off in crude prices, the market remains wary of lasting stability and supply recovery, with prices still elevated compared to pre-war levels [1].
CONCLUSION
The ceasefire between the US and Iran triggered a sharp sell-off in WTI crude oil, but prices remain well above pre-war levels, reflecting ongoing market caution. The upcoming direct talks and OPEC+ output increase could influence future price movements, though skepticism persists due to regional instability. Investors are closely watching for signs of durable peace and supply recovery.