Oil Prices Plunge as U.S. and Iran Reach Two-Week Ceasefire

Global oil benchmarks crashed on Wednesday after President Trump announced a two-week ceasefire between the United States and Iran. The agreement, reached just before a critical deadline, includes a commitment from Iran to ensure the safe passage of vessels through the Strait of Hormuz, a vital artery for global energy supplies. The news triggered a sharp correction in energy markets, with Brent crude tumbling more than 13% to approximately $95 per barrel. The Strait of Hormuz is a critical chokepoint, historically handling 20% of the world's daily oil and LNG supplies, and its reopening is viewed as a significant deflationary catalyst for energy prices. Despite the agreement, regional instability persists. Hundreds of ships remain stranded, and reports indicate recent drone strikes on Saudi Arabia's East-West pipeline as well as Iranian attacks on Red Sea export terminals and facilities in Kuwait. These disruptions have slowed the immediate recovery of traffic through the waterway. The futures market is already pricing in a sustained decline. December Brent contracts are trading below $80, while WTI contracts for autumn delivery are positioned in the mid-to-low $70s, suggesting that traders expect a steady return to pre-conflict pricing levels. U.S. oil majors ConocoPhillips (COP) and Occidental Petroleum (OXY) saw shares drop over 5% following the price slump. However, the companies remain on track for strong 2026 performance due to higher average prices throughout the year. Financial sensitivity remains high, as every $1 increase in WTI adds roughly $140 million to ConocoPhillips' annual cash flow and $240 million to Occidental's.