The United States and Iran have agreed to a two-week ceasefire proposed by Pakistan, President Trump announced Tuesday night. Iranian Foreign Minister Abbas Araghchi confirmed Tehran's acceptance and committed to allowing "safe passage" through the Strait of Hormuz during the ceasefire period. The deal comes into force when Iran reopens the strategic waterway, which handles about a fourth of the world's seaborne oil trade.
The Pakistani proposal emerged hours before Trump's deadline to launch massive strikes if no agreement was reached. Trump had threatened to target Iran's "entire civilization," specifically mentioning bridges, power plants, and potentially oil and water infrastructure. The two-week pause will be used to negotiate a larger agreement to potentially end the conflict, with peace talks expected Friday in Islamabad.
Crude oil prices dropped sharply following the announcement, with Brent crude futures falling roughly 16% to about $93 per barrel and WTI down about 19% to about $92 per barrel. The decline represents the biggest one-day fall in oil prices since the 1991 Gulf War. However, prices remain well above the roughly $73 mark before the war began in late February, when Dated Brent reached a record high of $144.42.
The ceasefire's success depends on whether shippers regain confidence in safe passage through the narrow waterway. Middle East producers including Iraq, Saudi Arabia, Kuwait, UAE, Qatar, and Bahrain collectively shut-in 7.5 million barrels per day of crude production in March, according to Energy Department statistics. Financial markets reacted positively, with S&P 500 futures rising more than 1% alongside the oil price decline.