Oil Down 18% as Trump Announces Ceasefire, Hormuz Reopen


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude and product futures tumbled as much as 18% in 
Wednesday (4/8) morning trading after U.S. President Donald Trump announced 
that the United States and Israel had agreed to a two-week ceasefire with Iran 
aimed at ending the Middle East conflict and reopening of the Strait of Hormuz.

   "I agree to suspend the bombing and attack of Iran for a period of two 
weeks," Trump wrote on his Truth Social platform on Tuesday (4/7) night, about 
90 minutes before the expiry of a deadline he had set for Iran to reopen the 
strait or face massive destruction of its power plants and other infrastructure.

   Trump, however, wrote that the ceasefire was contingent on Tehran agreeing 
to fully, immediately, and safely reopen the Hormuz waterway. Iran effectively 
blockaded the strait shortly after the February 27 start of U.S.-Israeli 
military airstrikes against it, halting most tankers passing through the 
waterway, which normally carries 20 million bpd of petroleum liquids.

   Prime Minister Benjamin Netanyahu and Iranian President Masoud Pezeshkian 
were also reported to have agreed to the ceasefire.

   Despite those reports, Saudi Arabia's east-west oil pipeline carrying crude 
from the Persian Gulf to the Red Sea for export was attacked at 1:00 p.m.  
local time, the Financial Times reported.

   U.S. Defense Secretary Pete Hegseth said the strait was open for passage, 
although he conceded that it may take time for the ceasefire to be completely 
implemented.

   By 8.15 a.m. ET on Wednesday, WTI for May delivery was down $20.32, or 18%, 
to $92.63 bbl, after a four-year high at $116.56 on Tuesday (4/7).

   ICE Brent for June fell $17.92, or 16%, to $91.35 bbl. The front-month 
contract for the global crude benchmark hit $119.13 in mid-March, reaching its 
highest since the February 2022 invasion of Ukraine by Russia.

   WTI's premium against Brent, dwindled to about $1.30 bbl, after surging last 
week to above $20, its highest since 2008.

   The spread between front-month May WTI and the immediate subsequent month, 
June, narrowed to around $12 bbl at a record high above $15.5 bbl on near-term 
supply concerns and increased demand for oil amid the supply crisis triggered 
by the Hormuz blockade.

   RBOB futures for May delivery fell by $0.3864 to $2.9188 gallon. It rose to 
$3.3628 in the prior session, reaching its highest since July 2022.

   Front-month ULSD futures slid $0.7698 to $3.7076 gallon, after a four year 
high of $4.7061 on March 20.

   The US dollar index softened by 0.059 points to 99.745 against a basket of 
foreign currencies.

   Tuesday's ceasefire came amid intervention by Pakistan's Prime Minister 
Shehbaz Sharif, who asked Trump for a pause in fighting to fulfill his role as 
mediator to the conflict. Israeli

   During the 40 days of fighting, at least 24 commercial vessels were 
reportedly struck by missiles and drones while being on the strait that borders 
Iran, Oman and the UAE, leading to the missing or deaths of 12 crew members.

   On the data front, the Energy Information Administration is due to report at 
10:30 a.m. ET inventories for U.S. crude, gasoline and distillates for the week 
ended April 3. In the prior week to March 27, the EIA said crude stocks climbed 
by 5.5 million bbl to 461.7 million bbl, reaching their highest for a week 
since June 16, 2023.




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