West Texas Intermediate (WTI) Crude Oil trades sharply lower on Wednesday, falling more than 10% after a temporary ceasefire agreement between the United States and Iran reduced the geopolitical risk premium embedded in prices. At the time of writing, WTI is trading near $89.50 per barrel, after hitting an intraday low near $86, marking its lowest level since March 25.
US President Donald Trump said on Truth Social that Washington would suspend attacks on Iran for two weeks, provided Tehran ensures the full reopening of the Strait of Hormuz. Iran signaled that safe transit through the key shipping route could be maintained during this period, raising expectations that global energy flows may normalize.
However, further downside appears limited, with prices stabilizing after the sharp pullback. Reports of continued airstrikes between Israel and Lebanon, along with warnings from Iranian officials that Tehran could withdraw from the ceasefire if attacks persist, highlight the fragile nature of the agreement.
In addition, according to the Financial Times, Saudi Arabia’s vital East-West oil pipeline, which carries crude from the Gulf to the Red Sea for export, has been attacked.
Against this backdrop, traders are likely to remain sensitive to headlines around the durability of the ceasefire, the reopening of the Strait of Hormuz, and the outcome of upcoming US-Iran negotiations scheduled later this week.
On the data front, the latest US Energy Information Administration (EIA) report showed Crude Oil inventories increased by 3.081 million barrels, compared to a rise of 5.451 million barrels in the previous week and above market expectations for a 0.7 million build.
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