It took less than two hours before Donald Trump’s self-imposed 8 p.m. deadline on Tuesday night for the announcement that stopped financial markets in their tracks.
West Texas Intermediate crude futures tumbled more than 15 percent in after-hours trading, falling below $95 a barrel, after the US president posted on Truth Social that he had agreed to suspend the bombing of Iran for a period of two weeks — contingent on Tehran reopening the Strait of Hormuz. The reversal was immediate and dramatic, erasing weeks of geopolitical premium in a matter of minutes.
The context matters here. Since the US-Iran war began on February 28, crude oil had surged by nearly 47 percent, driven by the effective closure of the Strait of Hormuz — a waterway through which roughly 20 percent of the world’s oil and gas passes daily.
That closure triggered what analysts described as the largest oil supply shock on record, affecting somewhere between 12 and 15 million barrels of crude per day and sending shockwaves through every sector exposed to energy costs, from airlines to shipping companies to household energy bills.
S&P 500 futures leapt more than 2 percent on the news. Dow futures jumped approximately 967 points, or 2.1 percent, and Nasdaq 100 futures climbed 2.3 percent in after-hours trading. For context, the S&P 500 had closed Tuesday’s regular session at 6,616.85 — a gain of just 0.08 percent on the day — after a fraught session during which Pakistan’s Prime Minister Shehbaz Sharif had intervened to request a two-week extension to Trump’s deadline. That intervention proved pivotal, providing the diplomatic framework within which both parties eventually reached agreement.
What is important to understand is that the ceasefire does not resolve the underlying questions the war raised. Iran’s statement was careful — emphasising that what had been agreed was a temporary suspension of hostilities and that safe passage through the Strait would be coordinated by Iran’s armed forces. Patrick De Haan, head of petroleum analysis at GasBuddy, noted promptly that the ceasefire had “not really clarified anything when it comes to the Strait.” Whether tankers can actually flow freely depends on implementation, not declaration.
Art Hogan, chief market strategist at B. Riley Financial, described the market reaction as sending an “extremely clear” message — that investors simply want the disruption behind them and the Hormuz corridor reopened. The jump in equities and collapse in oil prices reflected that desire more than any confident assessment of what comes next. Two weeks is a short window for negotiations that involve Iranian compensation demands, US military withdrawal conditions and a 10-point Iranian proposal that includes requirements the Trump administration has not yet publicly endorsed.
The longer-term economic ripple from six weeks of closure will also take time to unwind. Infrastructure damaged during the conflict, supply chains disrupted by the closure and the psychological premium embedded in energy markets do not disappear with a social media post. Analysts at UBS had already revised their year-end S&P 500 target downward before Tuesday night’s ceasefire, from 7,700 to 7,500, citing sustained oil pressure and the likely delay of Federal Reserve rate cuts into the second half of the year. That revision stands for now, but if the ceasefire holds and oil flows resume, it could quickly look conservative.
The session also featured a notable move in airline stocks. Delta Air Lines and United Airlines, both battered by surging jet fuel costs during the conflict, saw modest share price recoveries as the ceasefire news broke. The prospect of sustained $120-plus oil receding gave relief traders enough confidence to re-enter, though most analysts caution that any recovery for aviation stocks depends on whether the two-week window translates into something durable.