Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
LAST UPDATE | 6 hrs ago
OIL PRICES PLUNGED today while stocks rallied after the United States and Iran agreed to a two-week ceasefire that will see Tehran temporarily reopen the vital Strait of Hormuz.
With Donald Trump’s deadline approaching for the Islamic republic to reopen the waterway or face obliteration, he announced a halt to attacks for two weeks and said he had received a “workable” 10-point proposal.
Iran later said it had agreed to safe passage in the Strait, through which a fifth of global oil and gas passes.
The news pushed down crude prices, with West Texas Intermediate losing almost 20% and Brent as much as 16% as investors heaved a huge sigh of relief after more than five weeks of war that has hammered supplies.
This has seen oil prices drop to below $100 a barrel.
The euphoria also sent equities rocketing on hopes the crisis that has shocked the global economy for more than a month will come to an end.
The ceasefire also led to a sharp drop in the dollar, which had become the safe-haven while the war raged, with the yen, euro and pound all strengthening.
Gold rallied, having been hit by concerns of a sharp rise in inflation that will keep interest rates elevated, while bitcoin rose.
Trump had threatened that if Hormuz was not reopened, “a whole civilization will die tonight, never to be brought back again”. That came after he vowed to bomb bridges, power plants and other civilian infrastructure in Iran.
Iran warned it would deprive the United States and its allies of oil and gas “for years” if Washington crossed Tehran’s “red lines”.
However, as the world counted down to the cutoff, the US president took to social media to say: “Subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz, I agree to suspend the bombing and attack of Iran for a period of two weeks.”
Israel meanwhile said it supported the suspension of the bombing of Iran, but maintained the ceasefire did not include Lebanon.
“Unsurprisingly, the initial market reaction has been a positive one, albeit perhaps not as sizeable as one might’ve expected, largely owing to the grind higher in risk assets seen since the tail end of Tuesday’s cash session,” said Michael Brown at financial broker Pepperstone.
Meanwhile, global leaders have been welcoming the ceasefire while calling for a lasting peace.
UN Secretary-General Antonio Guterres urged all parties to work toward long-term peace in the Middle East.
Guterres said all parties must “comply with their obligations under international law and to abide by the terms of the ceasefire in order to pave the way toward a lasting and comprehensive peace in the region”.
Here at home, Foreign Affairs Minister Helen McEntee said the ceasefires marks a “potentially important turning point after what was a dangerous and unprecedented escalation across the Middle East in recent days”.
She added that it “offers a critical opportunity to reduce tensions and will bring relief to millions affected by conflict”.
McEntee also commended the “efforts of Pakistan, alongside Türkiye and Egypt, in supporting dialogue”.
However, she added that any ceasefire “must be comprehensive and include Lebanon” and called on “Hezbollah and Israel to cease attacks and military operations”.
“The Strait of Hormuz must open and remain safe to pass,” added McEntee.
“The protection of civilians must remain paramount, and all parties must uphold their obligations under international law.”
And while Iraq’s foreign ministry welcomed the ceasefire it too called for “serious and sustainable dialogue” between the US and Iran.
The ministry “calls for building upon this positive step by launching serious and sustainable dialogue tracks that address the root causes of the disputes and strengthen mutual trust,” it said on X.
South Korea meanwhile expressed hope that the ceasefire would bring about the safe passage of all vessels, including its own, through the Hormuz strait.
“The South Korean government hopes that negotiations between the two sides will be successfully concluded and that peace and stability in the Middle East will be restored at an early date,” South Korea’s Ministry of Foreign Affairs said in a statement.
“The South Korean government hopes that the free and safe navigation of all vessels, including those of South Korea, through the Strait of Hormuz will be swiftly ensured, and will continue to engage in communication and consultations with relevant countries to this end,” it added.
Japan also expressed hope for the safe passage of vessels through the Strait of Hormuz.
The world’s fourth-largest economy is the fifth biggest importer of oil, with around 70% coming through the vital waterway before the war.
“The most important thing is that concrete steps will be taken to de-escalate the situation, including ensuring the safety of navigation through the Strait of Hormuz,” Japanese government spokesman Minoru Kihara said.
“We hope the final agreement will be reached through diplomacy at an early date.”
However, Australia cautioned that the longer the war draws on “the more significant the impact on the global economy will be, and the greater the human cost”.
“Australia wants to see the ceasefire upheld and a resolution to the conflict,” Prime Minister Anthony Albanese’s office said in a statement.
“We continue to call on all parties to uphold international humanitarian law and protect civilian life,” it added.
New Zealand also warned that there remains “significant work” to be done to secure peace.
“While this is encouraging news, there remains significant important work to be done in the coming days to secure a lasting ceasefire,” Foreign Minister Winston Peters’ spokesperson said.
“In the coming days and weeks, New Zealand will stand in support of all efforts to bring about a lasting, durable end to this conflict,” he added.
To embed this post, copy the code below on your site
have your say