Oil plunges toward $90 and the Dow soars 1,300 points after Iran war ceasefire

A two-week ceasefire between the U.S. and Iran sent oil prices sharply lower and global stock markets higher after President Donald Trump announced he would suspend bombing operations against Iran in exchange for Tehran agreeing to reopen the Strait of Hormuz.

Crude benchmarks swung sharply lower, with WTI settling near $93 a barrel after shedding about 20% of its value, and Brent falling roughly 17% to around $92 a barrel. Both remain elevated compared to where they stood when fighting broke out. In premarket trading, contracts on the Dow pointed to a gain of more than 1,300 points, roughly 2.8%, while S&P 500 contracts were up about 2.3% and Nasdaq $NDAQ 100 contracts advanced around 2.9%.

The rally extended across regions. Asian markets posted broad gains, with Seoul's Kospi finishing nearly 7% higher, Tokyo's Nikkei up more than 5%, and Hong Kong's Hang Seng closing around 3% higher. European trading saw Germany's DAX advance approximately 4.9%, while the region-wide Stoxx 600 index was up roughly 4.2%.

Trump announced the ceasefire on Truth Social less than two hours before his 8 p.m. ET deadline to strike Iranian infrastructure. "We received a 10 point proposal from Iran, and believe it is a workable basis on which to negotiate," he said. Abbas Araghchi, Iran's foreign minister, posted on X $TWTR that ships would be able to move through the Strait of Hormuz over the coming two weeks, with Iran's military overseeing the arrangement.

Exactly how tanker traffic will be managed remains an open question. Citing Iran's semi-official Tasnim news agency, CNN reported that Tehran and Muscat are working on a toll arrangement for the waterway — something Washington and its partners are unlikely to accept, especially if any proceeds reach the Islamic Revolutionary Guard Corps. Prior to the ceasefire, some shipping firms had already been paying a reported $2 million per vessel for safe-passage assurances from Iran.

Ship-tracking platform MarineTraffic posted on X that a Greek-owned bulk carrier and a vessel flying a Liberian flag had both made it through the strait, describing the activity as encouraging early indicators of renewed movement. Whether vessel operators will act on that opening is another matter. TD Securities, in a Wednesday research note, expressed doubt about owners' willingness to commit their ships to the route while the ceasefire has no guarantee of renewal, writing: "We question the appetite for tankers to begin to move back into the Strait for as long as it is unclear this will extend beyond two weeks."

The conflict began on Feb. 28, when the U.S. and Israel attacked Iran. Tehran retaliated by targeting commercial vessels in the Strait of Hormuz, a chokepoint that normally handles roughly a fifth of the world's oil supply. The disruption has been described as the largest oil supply shock in history, with analysts estimating a deficit of roughly nine million barrels a day even after emergency stockpile releases and pipeline rerouting. Oil prices had briefly topped $114 a barrel earlier in the week.

Trade intelligence firm Kpler counted 187 tankers holding a combined 172 million barrels of crude and refined products still bottled up inside the Gulf as of Tuesday. That backlog is unlikely to clear quickly, and uncertainty about the ceasefire's durability kept some investors in defensive positions even as equities rallied. Safe-haven demand proved durable even as equities climbed: Gold in the spot market added more than 2%, reaching roughly $4,803 an ounce, while 10-year Treasury yields slipped about nine basis points, signaling that investors were not yet fully abandoning defensive positions.

Billy Leung, investment strategist at Global X ETFs, told CNBC that the rally did not reflect a wholesale shift in positioning. "Equities are responding to de-escalation headlines, but investors are not fully removing hedges given how uncertain the underlying situation remains," he said.