The US and Iran have agreed to a two-week ceasefire. Photo / AFP

Crude prices plunge, stocks surge as US and Iran agree ceasefire

Author: AFP,
Publish Date: Wed, 8 Apr 2026, 3:58pm

Oil prices plunged Wednesday while stocks rallied after the United States and Iran agreed to a two-week ceasefire that will involve Tehran temporarily reopening the vital Strait of Hormuz.

With US President Donald Trump’s deadline approaching for the Islamic republic to reopen the waterway or face obliteration, he announced a halt to attacks for two weeks and said he had received a “workable” 10-point proposal.

Iran later said it had agreed to safe passage in the strait, through which a fifth of global oil and gas passes.

The news pushed down crude prices, with West Texas Intermediate losing almost 20% and Brent as much as 16% as investors heaved a sigh of relief after more than five weeks of war that has hammered supplies.

The euphoria sent equities rocketing on hopes the crisis that has shocked the global economy for more than a month will end.

Seoul and Tokyo soared more than 5%, Taipei added nearly 4%, Sydney and Hong Kong more than 2%. Shanghai, Singapore and Wellington were also sharply higher.

Trump had threatened Tuesday that if Hormuz was not reopened, “a whole civilisation will die tonight, never to be brought back again”. That came after he vowed to bomb bridges, power plants and other civilian infrastructure in Iran.

Iran warned it would deprive the United States and its allies of oil and gas “for years” if Washington crossed Tehran’s “red lines”.

However, as the world counted down to the cutoff, the President took to social media to say: “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 said it “will be a double-sided CEASEFIRE!” and that “we have already met and exceeded all Military objectives, and are very far along with a definitive Agreement concerning Longterm PEACE with Iran, and PEACE in the Middle East”.

Prime Minister Shehbaz Sharif of Pakistan, which has played a key mediator role, said the ceasefire would start immediately.

He said the United States “with their allies” had agreed to a ceasefire everywhere, including Lebanon, implying that Israel had agreed to halt its invasion of its northern neighbour.

The decision also led to a sharp drop in the US dollar, which had become a safe haven while the war raged, with the yen, euro and pound all strengthening.

Gold also rallied around 5%, having been hit by concerns of a sharp rise in inflation that will keep interest rates elevated. Bitcoin rose.

“Unsurprisingly, the initial market reaction has been a positive one, albeit perhaps not as sizeable as one might’ve expected, largely owing to the grind higher in risk assets seen since the tail end of Tuesday’s cash session,” said Michael Brown at Pepperstone.

“Participants have been desperate for anything resembling good news for some weeks now, and even more desperate to see concrete steps being taken towards de-escalation.

“Now that we seem able to put a tick in both of those boxes, participants are unsurprisingly willing to significantly take up risk levels once more.”

Stephen Innes of SPI Asset Management said the deal “matters enormously for Asia”, where several governments have been forced to introduce measures to combat rising energy costs.

“Lower oil prices remove the chokehold that has weighed on regional risk sentiment, especially in markets that feel imported energy shocks first and hardest,” he said.

“With crude backing off, the pressure on inflation expectations and front-end yields eases at the margin, and that is enough to let capital rotate back toward risk, at least for now.”