Ceasefire Sparks Market Rally as Oil Prices Plunge on US–Iran Agreement

Global oil prices dropped sharply while stock markets surged on Wednesday after the United States and Iran reached a two-week ceasefire deal that includes reopening the critical Strait of Hormuz.

With a deadline set by President Donald Trump looming for Iran to restore access to the waterway or face military action, Trump announced a temporary halt to US attacks and said Washington had received a “workable” 10-point proposal from Tehran.

Iran subsequently confirmed it would ensure safe passage through the Strait, a key route responsible for transporting about one-fifth of global oil and gas.

The announcement triggered a sharp sell-off in crude markets, with West Texas Intermediate dropping nearly 20 percent and Brent crude falling up to 16 percent. Investors reacted positively after weeks of conflict that had significantly disrupted global energy supplies.

Equity markets rallied across the Asia-Pacific region. Seoul surged more than six percent, Tokyo climbed over five percent, Taipei rose 4.2 percent, while Sydney and Hong Kong gained more than two percent. Other regional markets including Shanghai, Mumbai, Bangkok, Manila, Jakarta, Singapore, and Wellington also recorded notable increases.

Trump had previously issued stark warnings, stating that failure to reopen Hormuz could result in extreme consequences, including remarks that “a whole civilization will die tonight, never to be brought back again.” He had also threatened strikes on infrastructure such as bridges and power facilities in Iran.

Iran responded with its own warnings, stating it could restrict oil and gas supplies to the US and its allies “for years” if its red lines were violated.

In a social media post, Trump outlined the conditions of the ceasefire:
“Subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz, I agree to suspend the bombing and attack of Iran for a period of two weeks.”

He described the agreement as “a double sided CEASEFIRE!” and said the US had already achieved its military objectives while moving closer to a long-term peace arrangement in the Middle East.

Pakistan’s Prime Minister Shehbaz Sharif confirmed the ceasefire would begin immediately, noting that the US and its allies had agreed to halt fighting “everywhere,” including Lebanon. However, Israel later clarified that its operations in Lebanon were not part of the agreement.

Israel supported the suspension of strikes on Iran but continued its separate military actions in Lebanon.

Iran’s Supreme National Security Council issued a statement declaring victory, saying:
“The enemy has suffered an undeniable, historic and crushing defeat in its cowardly, illegal and criminal war against the Iranian nation.”

Financial markets responded strongly to the ceasefire. The US dollar weakened as investors moved away from safe-haven assets, while the euro, pound, and yen strengthened. Gold prices rebounded, and bitcoin also rose amid renewed risk appetite.

Analysts attributed the rally to improved investor sentiment. Michael Brown of Pepperstone said markets had been seeking positive developments for weeks and were now ready to increase risk exposure following signs of de-escalation.

Stephen Innes of SPI Asset Management noted that the agreement was especially impactful for Asia, where rising energy costs had pressured economies. He said lower oil prices ease inflation expectations and support a return of capital to risk assets, at least in the short term.

Market data showed steep declines in crude prices alongside gains in Asian equities and shifts in currency values, reflecting a broad improvement in global sentiment following the ceasefire agreement.

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