SINGAPORE – Global oil prices tumbled and equity markets surged on Wednesday after the United States and Iran agreed to a conditional two-week ceasefire, easing immediate concerns over disruptions to one of the world’s most critical energy corridors, the Strait of Hormuz.

Benchmark Brent crude dropped roughly 13 percent to $94.80 a barrel, while U.S. crude fell more than 15 percent, reflecting a rapid unwinding of the geopolitical risk premium that had built up since hostilities escalated in late February. Despite the sharp decline, prices remain significantly above pre-conflict levels, when oil traded near $70 a barrel — underscoring the fragility of the current détente.

Markets Rebound Across Asia and Signal Gains on Wall Street

Equity markets responded swiftly. Major indexes across the Asia-Pacific region posted strong gains, with Japan’s Nikkei 225 rising 5 percent and South Korea’s Kospi advancing nearly 6 percent. Hong Kong’s Hang Seng and Australia’s ASX 200 also climbed, signaling renewed investor confidence.

U.S. stock futures pointed to a higher open, suggesting that Wall Street would follow suit as fears of prolonged supply disruptions receded. Analysts noted that futures markets — often a barometer of investor sentiment — reflected expectations of short-term stabilization rather than long-term resolution.

Energy Supply Fears Temporarily Ease

The Strait of Hormuz, through which roughly a fifth of the world’s oil supply passes, had become a focal point of the crisis after Iran threatened to target vessels in response to U.S. and Israeli airstrikes. Shipping activity had slowed dramatically, sending energy prices sharply higher and raising concerns about global inflation and supply chain disruptions.

Under the ceasefire terms, Iran signaled it would permit safe passage through the strait if attacks ceased, while the United States agreed to suspend military operations for the duration of the two-week window.

Energy analysts say the agreement could allow stranded oil tankers to resume transit, offering short-term relief to global markets. “Even a temporary reopening reduces immediate supply bottlenecks,” said one commodities strategist, noting that shipping flows are likely to normalize gradually rather than instantly.

Political Calculations and Economic Pressures

The truce also reflects mounting political and economic pressures on both sides. U.S. leadership faced growing concern that escalating conflict could trigger a surge in energy prices, risking domestic economic fallout. Analysts described further escalation as a potential “self-inflicted economic shock,” particularly amid fragile global growth and inflation concerns.

Iran, meanwhile, appears to be leveraging the ceasefire to secure strategic concessions while avoiding broader economic isolation.

Uncertainty Persists Despite Temporary Calm

Despite the market rally, analysts caution that the ceasefire remains fragile. The agreement is conditional, time-limited, and dependent on compliance from both sides — leaving open the possibility of renewed tensions.

Moreover, shipping volumes through the Strait of Hormuz, while expected to improve, remain below normal levels. Insurance costs for vessels and lingering security risks could continue to constrain flows.

“The market reaction is relief-driven, not resolution-driven,” one analyst noted. “The underlying geopolitical risk has not disappeared — it has merely been deferred.”

A Fragile Pause in a Volatile Landscape

For now, the ceasefire has provided a reprieve for global markets and policymakers alike. But with energy prices still elevated and geopolitical tensions unresolved, investors are likely to remain highly sensitive to developments in the region.

The coming weeks will test whether the agreement can evolve into a more durable de-escalation — or whether it marks only a brief pause in a conflict with far-reaching economic consequences.