Oil prices notch biggest daily drop in almost 6 years as cease-fire deal offers two weeks of uncertainty

By Myra P. Saefong and Isabel Wang

U.S. oil prices are still over 40% higher than before the Iran war, while Brent crude has risen 31% since late February

President Donald Trump said Washington and Tehran had agreed to a "double sided CEASEFIRE!"

Oil prices posted their biggest one-day percentage decline in almost six years on Wednesday after the U.S. and Iran agreed to a two-week cease-fire, but U.S. and global benchmark crude ended above their sessions lows as Iran maintained control of the Strait of Hormuz.

Iran, meanwhile, has reportedly accused Israel of breaking the cease-fire deal with its attacks on Lebanon. As a result, Iran's Fars News Agency said in a post on X that the passage of oil tankers through the Strait of Hormuz has been halted. White House press secretary Karoline Leavitt, meanwhile, said reports that Iran had shut down the strait were "false."

Read: Iran moves to put the brakes on reopening the Strait of Hormuz

"It's not surprising to see oil prices come down in the manner that they have," said Tariq Zahir, managing member at Tyche Capital Advisors. However, they are still substantially higher from when the war started, he noted.

This cease fire is 'two weeks of uncertainty, and we could be in the same exact place in two weeks.' Tariq Zahir, Tyche Capital Advisors

"Until we see real clarity on the strait reopening to everyone and the negotiations that start late this week, we do not feel we will see prices continue their downward track to prewar levels," he told MarketWatch.

"We need clarity on the strait, we need clarity on nuclear stockpiles and clarity on ballistic missiles. This cease-fire offers "two weeks of uncertainty, and we could be in the same exact place in two weeks," Zahir added.

U.S. benchmark West Texas Intermediate crude for May delivery (CLK26) (CL.1) fell 16.4%, to settle at $94.41 a barrel, after trading as low as $91.03 Wednesday. That marked its largest one-day percentage decline since April 27, 2020, according to Dow Jones Market Data.

June Brent crude (BRNM26) (BRN00) fell 13.3% to end at $94.75 a barrel, paring its decline for the session after touching an intraday low of $90.40. It logged its largest daily percentage fall since April 21, 2020.

The decline in oil prices comes after U.S. President Donald Trump on Tuesday evening announced in a post on Truth Social that Washington and Tehran had agreed to a cease-fire. The deal would allow for the Strait of Hormuz to reopen for two weeks, while the U.S. would suspend attacks on Iran.

The agreement was reached less than two hours before Trump's deadline of 8 p.m. Eastern time Tuesday, when he warned that Iran's "whole civilization will die" if the Islamic Republic did not accept his demands.

Still, it "seems like the U.S. told Iran that it would halt bombing, Iran said OK, and apart from that nothing else has been clarified," Gregory Brew, senior oil analyst at Eurasia Group wrote in a post on X. "Hormuz, GCC attacks, Israel-Lebanon. All still up in the air." GCC refers to the Gulf Cooperation Council, whose members include Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain and Oman.

"[The] oil market will release that soon enough," Brew wrote.

Read: Here's when gas prices and airfares could go down if the Iran cease-fire holds

Key questions remain when it comes to oil, including how quickly transit through the Strait of Hormuz can resume, how long will it take to resupply importers, whether the cease-fire will hold, and whether Iran will "capitalize on the opportunity to assert strength over the strait," said Rob Haworth, senior investment strategy director at U.S. Bank Asset Management.

He pointed out that there's a "physical limitation to normalization" when it comes to Asian supply and demand, because the trip to Asia from the Middle East takes 30 days each way. Also, there's the question of whether infrastructure damage in the Gulf will limit export capabilities if ships arrive to fill and resupply global inventories, said Haworth.

Oil prices remained significantly higher than before the U.S. and Israel first struck Iran at the end of February. WTI crude is still almost 41% higher than it was at the start of the war, while Brent crude has risen nearly 31% since then, according to Dow Jones Market Data.

Bettors on prediction-market platform Polymarket have wagered a 27% chance that traffic through the route will return to normal by the end of April, down from 65% one month ago. (Polymarket has a data partnership with Dow Jones, the publisher of MarketWatch.)

See: The cease-fire mirage: Here's why stock-market bulls may already be getting ahead of themselves

U.S. benchmark stock indexes surged in Wednesday dealings. The Dow Jones Industrial Average DJIA was up 2.5%, while S&P 500 SPX was rising 2.2% and the Nasdaq Composite COMP added 2.5%.

Read: The real reason stocks are rallying so much after the Iran cease-fire

Nora Redmond contributed.

-Myra P. Saefong -Isabel Wang

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04-08-26 1540ET