Oil Prices Plunge as Ceasefire Eases Fears of Energy Supply Disruption

Oil prices experienced their most dramatic decline in five years on Wednesday, plunging as diplomatic breakthroughs between the U.S. and Iran eased fears of a long-term energy supply disruption. The slump in crude futures followed reports that the Strait of Hormuz, a vital artery for global oil transit, would remain open under the newly brokered two-week ceasefire agreement.

The sudden drop in energy costs provided a tailwind for broader equity markets but signaled a sharp reversal for commodity traders who had hedged against a widening conflict. While prices surged earlier in the week on threats of escalated military action, the prospect of a diplomatic off-ramp led to a rapid liquidation of long positions. Analysts note that while the immediate supply risk has abated, oil markets remain sensitive to any signs that the truce might fail before the two-week window expires.