Global oil prices have fallen sharply and stock markets jumped after the US and Iran agreed to a conditional two-week ceasefire deal that includes the reopening of the Strait of Hormuz. The announcement triggered an immediate sell-off in oil markets, with prices slipping below USD 100 per barrel as concerns over prolonged supply disruptions eased.
The global benchmark fell as much as 15 per cent to just under USD 92 per barrel before recovering slightly, while US-traded oil dropped to around USD 96 per barrel. Brent crude declined by as much as 16 per cent before stabilising near USD 94 per barrel, and WTI recorded its steepest fall in nearly six years.
Lower oil prices also weighed on aluminium, with LME cash bid prices falling 2.24 per cent to USD 3,519 per tonne and offer prices down 2.22 per cent to USD 3,520 per tonne.
This reflects aluminium’s link to oil through the Hall–Héroult process, where carbon anodes-made largely from petroleum coke, a by-product of crude oil refining-are consumed during smelting. Typically, 0.4-0.5 tonnes of petroleum coke are required per tonne of aluminium, linking production costs to oil markets.
Easing in oil and aluminium prices was accompanied by a broader market rally, with US equities climbing after gains across Europe and Asia. Investors welcomed the ceasefire, expecting it to halt the US-Israeli military campaign and resume oil flows through the Strait of Hormuz, which carries about 20 per cent of global supply, with Iran and Oman set to levy transit fees.
However, the relief proved short-lived. Oil prices moved higher again after Iran accused the United States of violating elements of the ceasefire, casting doubt over the durability of the agreement. Iranian parliamentary speaker Mohammad Bagher Ghalibaf said three parts of Tehran’s 10-point proposal had been breached, citing continued Israeli strikes in Lebanon, a drone entering Iranian airspace, and disputes over Iran’s uranium enrichment rights.
On Thursday, prices rebounded after the previous session’s sharp losses. Brent rose by USD 2.6, or 2.74 per cent, to USD 97.35 a barrel, while WTI gained USD 3.02, or 3.2 per cent, to USD 97.43 a barrel.