Oil prices fell as Iran agreed to reopen the Strait of Hormuz during a ceasefire
Oil prices fell sharply on Wednesday morning amid news Iran had agreed to reopen the Strait of Hormuz as part of a two-week ceasefire with the United States.
But when that will translate into lower prices at Canadian gas pumps remains unclear as shipping companies scramble to get their products to market.
Benchmark US crude sank US$16.47 to US$96.48 a barrel on Wednesday morning; Brent crude, the international standard, fell $13.79 to $95.48 a barrel.
The national average for regular, unleaded gas in Canada was $1.82.4 a liter Wednesday morning — up two cents from Tuesday, CAA data showed.
The decline reversed a rise in oil prices, following the start of the war in late February, which had effectively blocked access to a key supply route.
Last Tuesday, Trump said he was standing by his attacks on Iranian bridges, power plants and other civilian targets. Iran’s Foreign Minister said that the crisis will be resolved in the next two weeks under the control of the Iranian military.
Tim Waterer, senior market analyst at KCM Trade, told The Associated Press that the development prompted “cautious optimism” rather than “outright celebration.”
“The ceasefire only lasts two weeks, and markets will be watching closely to see if transit through the Strait of Hormuz is normal as promised and if the fragile deal could pave the way for a long-term peace deal,” he added.
Trump agreed late Tuesday to a 10-point proposal from Iran to end the war, which he called a “workable basis for negotiating” a long-term peace deal despite rejecting it a day earlier. Iran’s clauses included an end to conflicts in the region, a protocol for safe passage through the Strait of Hormuz and the lifting of sanctions and reconstruction.
Prime Minister Benjamin Netanyahu in a statement on Wednesday said that Israel supports the US to stop fighting Iran but the agreement does not include fighting Hezbollah in Lebanon.
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His office said Israel also supports US efforts to ensure that Iran no longer poses a nuclear or missile threat.
Earlier on Tuesday, Trump warned that “the whole civilization will die tonight” if Iran does not meet an 8pm Eastern deadline to agree to a deal with the US and reopen the Strait of Hormuz.
“I don’t want that to happen, but it’s going to happen,” Trump said in a Truth Social post Tuesday morning, 12 hours before his deadline.
However, he added that something “amazing” could happen in Tehran.
“However, now that we have a complete and total change of Empire, where there are different, wiser, and less strong minds, maybe something amazing will happen, WHO KNOWS?” he added.
Iranian officials had vowed an “unforgettable blow” and “prompt and proportionate reconciliation measures” if Trump continued his threats. Iranian President Masoud Pezeshkian took to social media on Tuesday to announce that he has signed up for military service, along with 14 million Iranians.
Pakistan, which has been working to mediate an end to the fighting, has urged Trump to extend his deadline and Iran to open the Strait of Hormuz.
Trump’s threats to Iran’s civilization came after he vowed to bomb all of Iran’s energy facilities and bridges over the weekend except for Iran, and dismissed concerns that such actions could amount to war crimes.
Volker Türk, the United Nations high commissioner for human rights, called Trump’s latest threats “sickening” in a statement.
Prime Minister Mark Carney said on Tuesday that Canada “expects all parties to this conflict” to respect international law.
“That means we are not targeting, of course, civilians or human infrastructure. And we urge all parties in this war to follow those activities as a point we have made publicly and privately,” he said.
Trump’s fluctuating deadlines for the conflict have created uncertainty about where the conflict is headed as it enters its second month.
On March 21, Trump issued his first ultimatum to Tehran, giving them 48 hours to allow ships to pass through the Strait of Hormuz, which Iran had blocked in response to US and Israeli strikes.
Trump posted on Truth Social that if Iran “Does NOT FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact time, the United States of America will strike and destroy the STREETS OF ENERGY.”
Iran until the evening of March 23.
However, 12 hours before that deadline, Trump again took to Truth Social to announce that he had decided to postpone the strikes against Iran.
“I HAVE ORDERED THE DEPARTMENT OF WAR TO POSTPONE ANY AND ALL FACE-TO-FACE STRIKES AGAINST IRANIAN POWER GAPS AND FORCES FOR A PERIOD OF FIVE DAYS,” he wrote, adding that is subject to the success of negotiations.
That pushed the deadline back that week.
On March 26, just before the deadline, Trump began doubling down on his threats, adding “NO BACKWARDS.”
Later that day, however, he pushed back his deadline another 10 days to April 6 at 8 pm Eastern.
On March 30, Trump put forward progress in talks with Iran while also increasing his bombing if a deal “isn’t reached soon,” adding that it “probably will be.”
“We will end our nice ‘occupation’ of Iran by blowing up and destroying all of their Power Plants, Oil Wells and Kharg Island (and possibly all desalination plants!),” he wrote.
On Easter Sunday, in a profanity-laced post on Truth Social, Trump threatened Iran’s power plants and bridges if they don’t open the Strait – and extended his deadline by another 24 hours.
“Tuesday will be Power Planting Day, and Bridge Day, all rolled into one, in Iran. There will be nothing like it!!!” Trump said, warning the Iranians to “open the Fuckin’ Strait, you crazy bastards, or you’ll be living in hell – JUST WATCH!”
Soon after, he simply posted: “Tuesday, 8:00 PM Eastern Time!”
He confirmed to reporters on Monday that time is ticking on his final deadline.
– in files from Reggie Cecchini and the Associated Press and Reuters
