TEMPO.CO, Jakarta - Oil prices fell sharply Tuesday evening after U.S. President Donald Trump announced a two-week suspension of attacks on Iran, contingent on Tehran allowing safe passage through the Strait of Hormuz, CNBC reported.
The West Texas Intermediate (WTI) May contract dropped more than 16% to $94.47 per barrel by 08:03 PM ET, while international benchmark Brent for June delivery fell over 15% to $92.21 per barrel.
Trump said the ceasefire would take effect only if Iran immediately and safely reopened the Strait.
“Almost all of the various points of past contention have been agreed to between the United States and Iran, but a two-week period will allow the Agreement to be finalized and consummated,” he said in a social media post. The U.S. has received a 10-point proposal from Iran that provides a workable basis for negotiations.
Iranian Foreign Minister Seyed Abbas Araghchi confirmed that Tehran would allow safe passage during the ceasefire “via coordination with Iran’s Armed Forces and with due consideration to technical limitations.”
He added, “If attacks against Iran are halted, our Powerful Armed Forces will cease their defensive operations.”
The ceasefire was announced just under two hours before Trump’s 8 p.m. ET deadline for Iran to reopen the Strait, after he had threatened to bomb every bridge and power plant in the country. Earlier Tuesday, Trump had warned, “A whole civilization will die tonight, never to be brought back again.”
The president said he agreed to the ceasefire following discussions with Pakistan Prime Minister Shehbaz Sharif, who requested a delay to allow negotiations to continue and urged Iran to reopen the Strait as a goodwill gesture.
The Strait of Hormuz is a critical global oil artery, carrying about 20% of the world’s oil supplies before recent attacks on commercial ships by Iran.
The conflict has triggered the largest disruption of crude supplies in history, pushing crude oil, jet fuel, diesel, and gasoline prices higher. Analysts and oil executives have warned that continued disruption could lead to widespread fuel shortages worldwide.
Read: Iran War: Trump Announces Two-Week Ceasefire
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