image sourced from original article at Oil prices have fallen sharply after the United States and Iran agreed to a ceasefire, with President Donald Trump calling it a 'big day for world peace'. Brent crude dropped more than 13.5 percent to 94 dollars a barrel following news that Iran would reopen the Strait of Hormuz, a critical shipping route for global energy supplies.
The waterway carries about one fifth of the world’s liquefied natural gas and crude oil, and its reopening eased immediate fears of severe supply disruptions. However, production in several major Middle Eastern oil-producing countries has slowed and cannot quickly return to normal levels, limiting the scale of price declines.
Despite the drop, oil prices remain well above pre-conflict levels, when crude traded around 72 dollars a barrel and averaged 69 dollars last year. Some market participants remain cautious after weeks of shifting statements from Washington about the conflict’s status.
Asian stock markets reacted strongly to the ceasefire news. Major indexes across the region surged, with South Korea’s Kospi rising 7 percent and Japan’s Nikkei gaining 5 percent, reflecting relief in countries heavily dependent on Middle Eastern energy imports.
