Markets React Sharply To Ceasefire Announcement

The market reacted sharply after President Donald Trump announced a two-week ceasefire, sending crude oil prices lower and U.S. stock futures higher.

West Texas Intermediate Crude, the United States oil benchmark, fell about 17.5% to roughly $94 a barrel, while Brent Crude dropped 15.5% to about $92 a barrel. Dow Jones Industrial Average Futures and S&P 500 futures each rose by about 3%, while Nasdaq 100 futures climbed 3.5%. 

Trump said the ceasefire is contingent on Iran reopening the Strait of Hormuz.

“For a period of two weeks, safe passage through the Strait of Hormuz will be possible via coordination with Iran’s Armed Forces and with due consideration of technical limitations,” Iran said in a statement Tuesday night.

According to the marine vessel Hormuz Strait ship tracker, traffic has not fully resumed through the strait. However, Trump said the United States “will be helping with the traffic buildup” and that there “will be lots of positive action.” 

Secretary of War Pete Hegseth seemed to dismiss Iran’s claims that coordination with Iran’s Armed Forces would be required. “We know Iran says a lot of things,” said Hegseth at a Wednesday morning briefing. “Commerce will flow through the strait.” 

Experts say crude prices could fall even further as shipping resumes through the Strait, which handles roughly one-fifth of the world’s oil supply.

U.S. stocks are still up even after Trump announced a 50% tariff on “any and all goods” from countries supplying military weapons to Iran with “no exclusions or exemptions.” 

Stocks were already on the rebound from session lows after Pakistan’s Prime Minister Shebaz Sharif asked Trump to extend his Tuesday 8 pm ET deadline by two weeks and to have Iran open the Strait of Hormuz. The conflict with Iran has pushed gas prices above $4 a gallon for the first time since 2022, with crude oil prices up more than 70% on the year. 

Vice President JD Vance described the ceasefire as “fragile.” Trump had warned without an agreement, “a whole civilization will die.”