Oil prices dropped sharply on Tuesday after US President Donald Trump agreed to a two-week ceasefire with Iran, fueling expectations that tanker traffic could soon resume through the critical Strait of Hormuz.

US crude futures plunged by more than 15% in after-hours trading to below $95 per barrel—still significantly higher than the $67.02 recorded on February 27 before the conflict began. Brent crude, the global benchmark, also fell by 12.88% to $95.12.

The ceasefire news boosted investor sentiment, sending global equities higher. US stock futures rallied, with Dow futures jumping over 900 points (around 2%), S&P 500 futures rising 2.1%, and Nasdaq futures gaining about 2.5%.

Asian markets followed suit on Wednesday. Japan’s Nikkei 225 surged 4.9%, South Korea’s Kospi climbed 5.7%, and Hong Kong’s Hang Seng index advanced 2.8%.

Despite the optimism, analysts cautioned that uncertainties remain—particularly regarding the reopening of the Strait of Hormuz, a vital route that handles about 20% of global oil supply.

Bob McNally, president of Rapidan Energy Group, noted that while markets welcomed the ceasefire, clarity is still lacking. “The key issue is whether the Strait fully reopens, and so far, the US and Iran appear to be talking past each other,” he said.

Iran, while agreeing to the ceasefire, stressed that it is only temporary. A statement broadcast on state-run IRIB indicated that military operations had been halted under orders from the Supreme Leader, but the conflict itself is not over.

Market analysts say the reaction in both oil and equities highlights investor hopes for a swift resolution. “The message is clear—markets want the Strait reopened and the conflict behind us,” said Art Hogan, chief market strategist at B. Riley Financial.

President Trump announced the agreement shortly before a self-imposed deadline for further military action, stating that the deal was based on a 10-point proposal from Iran and hinged on reopening the Strait of Hormuz.

The conflict has triggered one of the largest oil supply shocks in history, disrupting an estimated 12 to 15 million barrels of crude per day. However, questions remain about how quickly normal operations can resume.

Iran has also asserted that it will continue to regulate movement through the Strait, potentially strengthening its geopolitical leverage.

Analysts warn that while the ceasefire may ease short-term tensions, the long-term outlook for global energy markets remains uncertain. Karl Schamotta of Corpay Currency Research noted that Iran’s actions have underscored its ability to significantly disrupt global oil and gas markets.