The agreement of a two-week conditional ceasefire between the US and Iran has been welcomed by the energy markets.
Oil prices have fallen 15 per cent to below $100, while European Gas has fallen 20 per cent to its lowest price since the start of the war at around 43 euros.
UK Natural Gas, the predominant energy source for the country, has fallen nearly 18 per cent, to around 111p per therm.
The ceasefire, which was agreed at around 18:30 EDT, came just 90 minutes before US President Donald Trump’s deadline for the Iranians to reach a deal.
Trump threatened that “a whole civilisation will die tonight” if Iran and the US failed to come to an agreement.
Ceasefire Plans
Comprising the ceasefire is a 10-point plan, which crucially includes the promise to reopen the Strait of Hormuz – the Iranian-controlled waterway in which 20 per cent of the world’s oil and LNG supply passes through.
Trump had previously demanded the strait be reopened in an expletive-ridden rant on Easter Sunday.
Iran had closed the route to all US and Israeli ships in response to the war. Some ships from select nations, such as Pakistan, India, China and the Philippines, have been allowed through.
As part of the ceasefire, Iran will charge a $2mn toll for ships passing through the Strait of Hormuz. Iran said they will use the fees to rebuild infrastructure destroyed by US-Israeli strikes.
In a response to the reopening, global shipping giant Maersk said they will “take a cautious approach”. They have stopped all tankers from passing the strait since the war broke out.
But this ceasefire is rife in instability and uncertainty. Israel has already announced they will continue military action in Lebanon, despite the agreement to end all conflict in the country. And with the US objective still pinned on an Iranian regime change, a relapse into conflict after the 2-week window is still possible.
That being said, the fall in prices will bring much needed economic relief to households and consumers, albeit if only temporary.
