Crude oil prices went into free fall Tuesday evening, plummeting below $100 a barrel after President Trump announced a two-week ceasefire with Iran backed by Pakistan's proposal. The drop marks the steepest single-day decline since the 1991 Gulf War.
Brent crude futures, the global benchmark, shed roughly 16 percent to settle near $93 per barrel. U.S. crude tracked even lower, down about 19 percent to approximately $92. Despite the dramatic reversal, both remain well above the roughly $73 level recorded just before fighting erupted at the end of February.
The ceasefire hinges on Iran agreeing to fully reopen the Strait of Hormuz, Trump said. That waterway handles about a quarter of the world's seaborne oil trade, and its effective closure triggered the largest disruption in oil market history.
Tankers Still Afraid to Move
The real test ahead is whether shipping companies will actually believe the ceasefire holds enough to resume moving oil, liquefied natural gas, and other cargo through the narrow channel. The physical market remains deeply unsettled even after Tuesday's price collapse.
Middle Eastern producers had slashed output dramatically during the crisis. Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain collectively shut down 7.5 million barrels per day of crude production in March, with even higher cuts reported this month, according to Energy Department data.
The strain showed up in dated Brent crude, the real-world benchmark for physical barrels. That metric hit an all-time record of $144.42, surpassing the previous peak set in 2008 during the financial crisis. Refineries and traders desperate for supply had pushed spot prices to extraordinary levels while futures trading showed traders betting on eventual relief.
Whether shippers will actually test safe passage through the Strait remains unclear. The market moves in two directions: futures traders betting on a calmer geopolitical picture pushed prices down sharply, but physical traders in oil markets worldwide are still cautious about committing tankers to routes that may face disruption again.
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