Global oil Prices experienced a sharp sell-off on Wednesday, with prices falling by more than 15 percent following the announcement of a temporary two-week ceasefire between the United States and Iran, mediated by Pakistan.
Brent crude futures dropped nearly 16 percent, closing at $91.72 per barrel from the previous $109.27. At the time of reporting, Brent was trading around $94.70, down 13.3 percent, while West Texas Intermediate (WTI) fell 15 percent to $95 per barrel.
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The steep decline came in the wake of Pakistan’s diplomatic intervention, which successfully persuaded both Washington and Tehran to pause hostilities. This de-escalation has eased fears of further disruption in the Middle East, a key region for global oil supply.
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Iran’s Foreign Minister Seyed Abbas Araghchi confirmed that Tehran would allow safe maritime passage through the strategically vital Strait of Hormuz for the duration of the ceasefire. This reassurance helped stabilize shipping routes and contributed to the sharp drop in crude prices.
US President Donald Trump also confirmed that Washington would suspend military action against Iran during the ceasefire period. He described the arrangement as a “double-sided ceasefire,” noting that major military objectives had been largely achieved and that both sides were moving closer to a broader agreement aimed at long-term regional stability.
According to Trump, many of the critical disputes between the United States and Iran have already been addressed, providing a temporary window for diplomatic progress. Market analysts noted that this unexpected development has significantly reduced the risk premium on oil, leading to immediate relief for global energy markets.
While the ceasefire is temporary, it underscores the potential impact of diplomacy on energy markets and highlights Pakistan’s emerging role as a facilitator in high-stakes international negotiations.