Brent and WTI Plunge Following Trump’s Statement: What Happened in the Oil Market
8 April 09:17
The global oil market plummeted after U.S. President Donald Trump announced a two-week ceasefire with Iran and linked it to the reopening of the Strait of Hormuz. Following this announcement, Brent and WTI prices fell by about 13–15%, while stock markets, on the contrary, rose. Axios and Reuters report on this, according to "Komersant Ukrainian"
What exactly happened
On the night of April 8, Donald Trump announced an agreement on a two-week pause in strikes against Iran. He cited the full and safe reopening of the Strait of Hormuz to shipping as a key condition. At the same time, the Iranian side declared its readiness to ensure safe passage through the strait during this period.
This news signaled to the market that the threat of a major disruption in oil supplies from the Middle East had temporarily subsided. As a result, traders began to dump oil futures en masse, which had previously been rising in price amid fears of a protracted war and a blockade of the Strait of Hormuz.
How exactly did oil prices fall?
Following the ceasefire announcement, U.S. WTI crude fell by $16.84 to $96.11 per barrel. Brent dropped by $14.51 to $94.76 per barrel. The Associated Press called this a sharp reversal following the previous war-driven price spike.
Axios reported that the drop was the steepest single-day move in the oil market since the 1991 Gulf War.
Reuters also reports on Brent’s sharp decline following news of a ceasefire and a partial easing of tensions around the Strait of Hormuz.
Why did the market react so sharply?
The main reason is the Strait of Hormuz. It is one of the most important maritime routes for global oil trade, through which about 20% of the world’s oil exports pass. When there is a risk of it being blocked, oil prices rise sharply. When there is a chance that the strait will reopen and tensions will de-escalate, the market reacts in the opposite way—with a drop.
Even before the ceasefire announcement, the market was already overheated by fears of military action, strikes on Iranian infrastructure, and an actual supply crisis in the region.
Reuters reported the day before that spot oil prices had risen in some places to nearly $150 per barrel due to panic amid problems in the Strait of Hormuz.
Does this mean the crisis is over?
The ceasefire has so far been declared for only two weeks, and markets view it as a temporary de-escalation rather than a final resolution. Reuters notes that the physical oil market remains tight, and supplies are disrupted. Even after news of a pause in the war, the supply shortage has not completely disappeared.
Furthermore, shipping through the Strait of Hormuz has yet to return to normal. Reuters reported a significant buildup of tankers and cargo in the region, so even if the route reopens, a return to normal traffic will not be immediate.
How other markets reacted
Amid the sharp drop in oil prices, stock markets rose. AP reported strong gains in Asian indices, as well as a positive reaction on Wall Street. Investors viewed the news of the ceasefire as a signal of reduced geopolitical risk and a possible easing of inflationary pressure.
Reuters also noted a decline in market volatility and improved sentiment in currency and stock markets following reports of a pause in the conflict between the U.S. and Iran.
What this means for the world
The drop in oil prices following Trump’s statement means that markets currently believe in the possibility of at least a brief pause in the major Middle East crisis. For oil-importing countries, this is a chance to avoid even steeper price hikes for energy, fuel, and logistics. For the global economy, it is a signal that the risk of a new energy shock has temporarily decreased.
At the same time, prices remain higher than before the latest round of the conflict, meaning that energy instability is not yet over. Even after the collapse of Brent and WTI prices, the market remains highly sensitive to any new statements from the U.S., Iran, and Israel.
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