Oil’s immediate slide from around $115 to below $100 shows markets are embracing the US-Iran ceasefire and unwinding war premium. But with no peace deal in place, prices are likely to hold above $80 as residual risk remains. The sharp move reflects a rapid shift from pricing disruption to pricing partial normalization following the announcement of a two-week “double-sided ceasefire.”
The de-risking move was triggered by US President Donald Trump’s decision to suspend planned attacks on Iranian infrastructure, conditional on the “COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz.” Trump declared, “This will be a double sided CEASEFIRE!”, signaling a temporary pause in escalation.
On the Iranian side, Foreign Minister Abbas Araghchi confirmed that vessels would be allowed to transit the Strait during the ceasefire period “via coordination with Iran’s Armed Forces.” This effectively enables a safe reopening of Hormuz, removing the most acute supply bottleneck.
A critical development underpinning this ceasefire is the emergence of Pakistan as a credible intermediary. Prime Minister Shehbaz Sharif and Field Marshal Asim Munir were directly credited by Trump, highlighting a significant shift in diplomatic backchannels. This marks the establishment of a viable mediation channel between Washington and Tehran, something markets had not been able to price previously.
The immediate market impact comes through supply normalization. With tankers resuming transit, the collapse in war-risk insurance premiums is allowing crude flows from Saudi Arabia, Iraq, and Kuwait to restart. This insurance premium collapse is a key channel through which oil prices have adjusted lower.
Crucially, this remains a pause, not peace. The agreement lasts only two weeks, and without tangible progress toward a broader settlement, a portion of the war premium is likely to remain embedded. This explains why the market is repricing lower—but not collapsing.
From a price framework perspective, Brent is now likely to test $90 and potentially extend toward $80. However, a sustained break below 80 would require clear progress toward a lasting peace deal. Without that, residual geopolitical risk should continue to anchor prices above this level.
Technically, Brent crude’s fall from 119.24 resumed by breaking 96.26. This decline is seen as the third leg of the pattern from 119.97 high. Immediate focus is now on 100% projection of 119.24 to 96.26 from 114.81 at 91.83. Firm break there will pave the way to 138.2% projection at 83.05, where it will meet 81.41 key support level.
This aligns with the broader view: oil is normalizing—but not yet transitioning back into a full peace regime.
