Oil prices plummet amid Trump-Iran ceasefire deal

Oil prices plummeted Wednesday after President Trump announced a two-week ceasefire with Iran.

Futures for international benchmark Brent crude were down about 17 percent to about $91 per barrel, while U.S. benchmark West Texas Intermediate was down about 18 percent, trading at around $93 per barrel Wednesday morning.

The Wall Street Journal reported prices were heading for their biggest single-day drop since the beginning of the COVID-19 pandemic.

Stock prices rose on the news, with the S&P 500 up about 3 percent. 

While oil prices are still higher than they were before the war with Iran, the massive drop indicates that markets are optimistic about the president’s ceasefire announcement.

Trump said Tuesday that he would “suspend” attacks on Iran for two weeks, as long as Tehran agrees to keep the Strait of Hormuz open.

The strait, off Iran’s coast, is a key oil shipping channel, with about 20 percent of the world’s oil traveling through the waterway on an average day.

Since the start of the conflict, the strait has been mostly closed, with Iran threatening boats that cross through. This has sent oil prices soaring in recent weeks.

It has also inflamed prices at the pump back in the U.S. Gasoline prices did not immediately react to oil prices dropping, as the national average gasoline price was still around $4.16 per gallon on Wednesday.

If oil prices remain low, gasoline prices could drop in the weeks ahead, though the oil price is likely to depend on the actions of leaders of the U.S. and Iran.