Nigerian crude oil, Bonny Light, fell below $95 per barrel on Wednesday, down from over $130, following an agreement between Iran and the United States to reopen the Strait of Hormuz for two weeks under a temporary ceasefire.
The Strait of Hormuz is a crucial channel, carrying roughly 20% of the world’s energy supply. Bonny Light had surged more than 50% since the outbreak of the Middle East conflict involving the United States.
With a looming ultimatum from former US President Donald Trump threatening attacks if Iran did not reopen the waterway, he announced a two-week suspension of military actions after receiving a “workable” 10-point proposal from Tehran. Iran confirmed its agreement to allow safe passage through the Strait, calming fears of further supply disruptions.
The announcement sent crude prices sharply lower. US West Texas Intermediate dropped almost 20% to $96.31 per barrel, while Brent fell around 16% to $94.71 per barrel.
Global equities surged on renewed optimism. In Asia, Japan’s Nikkei climbed 5%, South Korea’s KOSPI vaulted 6%, prompting a temporary trading halt. Other major markets, including Taipei, Mumbai, Hong Kong, Sydney, Shanghai, Bangkok, Manila, Jakarta, Singapore, and Wellington, also posted strong gains.
Prime Minister Shehbaz Sharif, who mediated the talks, said the ceasefire would take effect immediately, with the US and its allies agreeing to a suspension of hostilities, including in Lebanon. However, Israel clarified that its operations in Lebanon were not covered by the ceasefire, while supporting the halt in bombing Iran.
Trump highlighted on social media that the ceasefire would be “double sided” and praised the progress toward “long-term peace with Iran and the Middle East.” He also noted US assistance to ease maritime traffic in the Strait of Hormuz and encouraged Iran to begin reconstruction efforts.
The developments have not only eased geopolitical tensions but also demonstrated the sensitivity of global energy markets to events in the Middle East, underscoring the interconnection between political decisions and crude oil pricing.
