Oil prices fall sharply after Trump announces two-week Iran ceasefire

News of a two-week ceasefire between the US, Israel and Iran has caused a sharp decline in oil prices and a surge in the stock market.

Oil has fallen nearly 14%, from $100 to $94 for a barrel of benchmark Brent crude.

Iran war latest: Trump declared it a ‘big day for world peace’

Prices have not been this low since the early days of the war. But it is still well above pre-war levels – around $72 – as supply concerns remain.

The figure is also much higher than the 2025 price of $69 per barrel.

The fall in UK wholesale gas prices is particularly welcome for British households. They have fallen more than 18% to their March 2 low.

However, like oil, at 110 pence per unit of gas, it is still well above the pre-war level of 78 pence.

Driving the price decline was news of the Iranians reopening the Strait of Hormuz, a key oil and gas shipping lane.

not quite plain sailing

However, there is now a struggle to restart production and begin shipping.

It would take time for powered-down oil and gas producers to reach pre-war production.

And refineries, which have been without crude products to turn them into things like aviation fuel, will take time to acquire, produce, and ship oil and gas derivatives.

The supply crisis will not go away any time soon. Farmers may face increased fertiliser prices, and petrol and diesel will remain expensive for at least a few weeks.

These issues could prevent oil and gas prices from falling.

British influence

This is where Britain feels the impact. Higher fossil fuel costs drive up prices throughout the economy.

Inflation is forecast to rise, but traders are reconsidering how much it will increase.

In March, those traders had expected three interest rate hikes by 2026, bringing the base rate to 4.5%.

However, there has now been only one increase in prices for September, which is expected to bring base borrowing costs back to 4%.

Before the war, a series of cutbacks was widely predicted.

For the first time in two weeks, one pound is being bought for $1.34, up from $1.32 yesterday.

There was little change against the euro, with one pound still buying at €1.14.

huge surge in stock market

Meanwhile, stock markets are rising.

The UK’s top-flight FTSE 100 index of the London Stock Exchange’s most valuable companies is up more than 2.3%.

Major stock indices of major Asian economies have recorded giant gains.

South Korea’s main stock index, the Kospi, is up nearly 7%.

Japan’s Nikkei is up a whopping 5.5%.

Both were heavily dependent on imports from the Middle East and faced panic buying amid fears of shortages.