US President Donald Trump announced that he was suspending the bombing of Iran in exchange for the opening of the Strait of Hormuz. Both Iran and Israel confirmed the ceasefire shortly afterwards. Oil prices dropped 15 per cent to below $100 a barrel.
Trump wrote on Truth Social on Tuesday night: ‘Based on conversations with Prime Minister Shehbaz Sharif and Field Marshal Asim Munir, of Pakistan, and wherein they requested that I hold off the destructive force being sent tonight to Iran, and 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. This will be a double sided CEASEFIRE!’
He added that Iran had put forward a ‘10 point proposal’, which he said he considered a ‘workable basis for negotiations’. He said the US had ‘met and surpassed all Military objectives’ in Iran and was ‘very far along with a definitive Agreement concerning Longterm PEACE with Iran, and PEACE in the Middle East’.
Initially, it was unclear whether Iran would confirm the US president’s words. Shortly afterwards, however, the US Pentagon halted the bombing and Iran’s Supreme National Security Council announced that it had agreed to a two-week ceasefire in the war with the United States and Israel.
Iranian Foreign Minister Abbas Araqchi said Iran would open the Strait of Hormuz to commercial ships during the two-week period, allowing them safe transit through the corridor through which about a fifth of the world’s oil supplies and a fifth of the traded volume of liquefied gas passed before the war.
The passage of ships through Hormuz will be coordinated ‘with the Iranian Armed Forces’ and ‘technical constraints’ will be duly taken into account, according to Araqchi.
Trump wrote in another social media post on Wednesday morning that ‘the United States of America will help solve the traffic jam in the Strait of Hormuz’.
Israel backs ceasefire but excludes Lebanon
Israeli Prime Minister Benjamin Netanyahu’s office said it supported President Trump’s decision to suspend strikes against Iran for two weeks, subject to Iran immediately opening the Strait of Hormuz and stopping all attacks on the US, Israel and countries in the region.
However, the office added that ‘the two-week ceasefire does not include Lebanon’. That contradicted Pakistani Prime Minister Shehbaz Sharif, who said the ceasefire applied to all fronts, including Lebanon.
Oil prices plummet, markets react by rising
Global financial markets reacted to the ceasefire by easing sharply. The price of US crude oil fell by around 15 per cent to $96.31 per barrel, while Brent weakened by 13 per cent to $95.36.
Investors reacted mainly on hopes that traffic through the Strait of Hormuz would resume.
Equity markets rallied sharply, with futures on the S&P 500 index up more than two per cent and European markets as well as Japan’s Nikkei adding roughly five per cent. South Korea’s KOSPI even rose by six per cent, leading to a brief pause in trading.
The dollar weakened significantly. Its index, which measures its value against a basket of six major currencies, hovered around 98.9, near a one-month low. The yield on the 10-year US Treasury note fell to 4.247 per cent.
Analysts cautioned that this was only a short-term easing, as the conflict remains unresolved. The key, they said, will be whether confidence can be restored among shipping companies and insurers. Some experts warned that uncertainty may persist for several more months.
(ft, truth, reuters, sak)