Oil Prices Plunge Below $100 as US-Iran Ceasefire Falters

A temporary ceasefire between the US and Iran has led to a plunge in oil prices below $100 per barrel, causing major oil stocks and index funds to drop in premarket trading.

The agreement aims to reopen the Strait of Hormuz, a critical waterway that normally carries one-fifth of global oil and liquefied natural gas flows. However, analysts warn that shipping uncertainty remains, with Iran likely to restrict traffic through the strait.

Crude prices dropped 16% for Brent crude and 15% for West Texas Intermediate, marking one of the worst drops since the early phase of the conflict. Trading activity surged after the announcement, with over 240,000 Brent contracts changing hands in the first hour.

USO fell 11%, while Trio Petroleum (TPET) slid 26%, and Battalion Oil (BATL) declined 24% in premarket trading. Analysts see a potential early step toward a broader resolution to the conflict but note that progress toward reopening the Strait of Hormuz is essential for oil prices to trend back toward pre-conflict levels.