NEW YORK, Apr 8: Global financial markets reacted sharply after the United States and Iran reached a tentative two week ceasefire agreement, easing concerns over prolonged disruption in the energy supply chain. The development also includes the reopening of the critical Strait of Hormuz, a key route for global oil shipments.
Crude oil prices witnessed a steep decline, with US benchmark crude falling over 14% to settle below $97 per barrel. Brent crude, the global benchmark, also dropped significantly to around $95. The fall comes after weeks of heightened volatility triggered by tensions in the Persian Gulf, where supply routes had been disrupted.
Equity markets, on the other hand, surged on renewed optimism. Japan’s Nikkei 225 index climbed nearly 5%, while South Korea’s Kospi gained more than 5%. In the United States, stock futures signaled strong gains, with the S&P 500 futures rising over 2% and Dow futures advancing by around 2%.
The easing of tensions followed remarks indicating a pause in potential military escalation. The US signaled restraint on planned strikes, while Iran confirmed that maritime passage through the Strait of Hormuz would be temporarily allowed under its supervision.
Despite the positive market response, uncertainty remains over the exact timing and durability of the ceasefire. Reports of continued hostilities across parts of the Middle East underline the fragile nature of the agreement.
Earlier trading sessions had reflected investor anxiety, with US markets fluctuating amid escalating rhetoric. However, diplomatic efforts to delay further confrontation helped stabilize sentiment by the close of trading.
The latest developments mark another phase of sharp market swings witnessed in recent weeks, driven largely by geopolitical uncertainty and concerns over energy supply disruptions.