Prices of the West Texas Intermediate, or the US crude variant, fell as much as 17% to slip towards the $95 a barrel mark. Brent is yet to begin trading, but had given up all of its gains in Tuesday’s trade to close at $109.5 a barrel.
Trump announced on Truth Social that this will be a “double-sided” ceasefire, subject to Iran agreeing to an immediate and safe reopening of the Strait of Hormuz.
The near-closure of the Strait of Hormuz, which transits nearly 20% of the global energy supply, mostly to Asia and other Emerging Markets, roiled energy markets globally, with the US crude prices surging as much as 70% during the war period.
Curtailment of shipments is expected to leave more than 9 million barrels a day of oil output from key Middle Eastern producers shut in during April, according to US government estimates.
“The physical system won’t snap back quickly. Restarting shut-in wells, repositioning crews and vessels, and rebuilding refinery inventories will take months,” said Robert Rennie, head of commodity research at Westpac Banking Corp. “In that environment, it’s hard to see Brent sustainably trading much below $90–$95 in the near term, assuming a ceasefire materialises at all.”
Before the ceasefire announcement, US crude prices had begun to trade at a premium to the Brent variant.
(With Inputs From Agencies)
