A conditional two-week ceasefire agreement between the United States and Iran, which includes the reopening of the strategically critical Strait of Hormuz, has sent shockwaves through global energy and financial markets, triggering a steep drop in international crude prices and widespread gains across stock exchanges worldwide.
Following the announcement of the deal, global benchmark Brent crude plummeted roughly 13% to settle at $94.80 per barrel, while West Texas Intermediate, the U.S. benchmark, fell more than 15% to hit $95.75 a barrel. Even with this significant decline, oil prices remain well above the levels seen before the outbreak of hostilities on February 28, when crude traded at approximately $70 per barrel.
The sharp run-up in energy costs over recent weeks stemmed from widespread disruption to Middle Eastern oil and gas supplies after Iran threatened to target transiting vessels in the strait, a retaliatory measure following joint U.S.-Israeli airstrikes on Iranian infrastructure. The Strait of Hormuz remains one of the world’s most vital chokepoints for global energy trade, with roughly a fifth of all globally traded oil passing through the waterway daily.
Global equity markets responded immediately to the ceasefire news. After solid gains across Asian exchanges, European markets opened sharply higher: London’s FTSE 100 climbed 2.53% in early trading, France’s CAC 40 gained 4%, and Germany’s DAX rose nearly 5%. In Asia, Japan’s Nikkei 225 finished 5% higher, South Korea’s KOSPI jumped almost 6%, Hong Kong’s Hang Seng Index added 2.8%, and Australia’s ASX 200 gained 2.7%. U.S. stock futures also pointed to a strong opening rally for Wall Street following the news.
The ceasefire deal came after Iran set an ultimatum deadline of 20:00 EDT Tuesday, warning that “a whole civilisation will die tonight” if no agreement was reached. Analysts note the truce marks a partial political victory for former U.S. President Donald Trump, but it comes at significant long-term economic cost for global energy markets.
Xavier Smith, research director at market intelligence firm AlphaSense, noted that even with his tough public rhetoric, Trump always faced strong incentives to avoid conflict escalation that would send energy prices skyrocketing. “An uncontrolled price spike would have amounted to a self-inflicted economic wound that few politicians would risk, especially with the constant pressure of approval ratings hanging over his leadership,” Smith explained.
Saul Kavonic, an energy analyst at financial services firm MST Marquee, projected that the dozens of oil tankers stranded near the strait in recent weeks will now be able to transit the waterway during the 14-day ceasefire, delivering much-needed near-term relief to tight global energy markets.
Even amid the conflict, a small number of vessels have managed to pass through the strait, albeit at far lower volumes than normal. Several Asian nations, including India, Malaysia, and the Philippines, negotiated individual safe passage agreements for their flagged vessels in recent weeks, and China has confirmed multiple of its commercial ships have crossed the waterway since hostilities began. On Friday, French media outlet BFM TV confirmed a Malta-flagged container ship owned by French shipping giant CMA CGM successfully traversed the route, and Japanese shipping firm MOL also confirmed a Japanese-owned natural gas carrier exited the strait safely.
Despite the immediate market optimism from the ceasefire, Kavonic warned that full resumption of Middle Eastern energy production is unlikely until global markets gain confidence in a lasting, permanent peace deal. He added that damage to regional energy infrastructure could take months, if not years, to fully repair, keeping long-term supply constrained even during the temporary truce.
Rystad Energy, an independent energy research firm, estimates the total damage to regional oil and gas infrastructure from retaliatory Iranian attacks could exceed $25 billion and take multiple years to fully restore. A mid-March strike on Qatar’s Ras Laffan industrial hub, which produces roughly 20% of the world’s total liquefied natural gas (LNG) exports, cut the facility’s export capacity by 17%, with full repairs expected to take up to five years.
Asian economies have borne the brunt of the conflict’s economic fallout, as most major Asian nations rely heavily on Gulf energy imports. Governments and private sector firms across the region have rolled out emergency measures over recent weeks to combat skyrocketing fuel prices and widespread supply shortages. On March 24, the Philippines — which imports 98% of its total oil supply from the Middle East — became the first nation to declare a national energy emergency after domestic petrol prices more than doubled. Multiple regional airlines have already raised ticket prices and cut scheduled flight routes to offset spiking jet fuel costs.
Ichiro Kutani, an analyst at Japan’s Institute of Energy Economics, pointed out that developing Asian economies have faced disproportionate harm from the conflict, as many lack domestic refining capacity or sufficient strategic petroleum reserves to buffer against price shocks. “The ceasefire is unequivocally positive news for Asian nations,” Kutani explained. “If the truce holds, oil prices will gradually return to more normal levels, even if that process takes longer than many markets currently expect.”