Oil prices sink over 5% on ceasefire hopes in Middle East

2026-03-25 - 03:45

AI-generated image Oil prices plunged more than 5% today (March 25) as hopes for a possible U.S.-led ceasefire with Iran raised expectations of easing supply disruptions in the Middle East. Global oil markets saw a sharp decline after reports emerged that the United States had sent Iran a 15-point proposal aimed at ending the ongoing conflict between the two countries. The potential for reduced tensions in a key oil-producing region weighed heavily on prices. Brent crude futures dropped by $6.21, or 5.9%, to $98.28 a barrel in early trading, after briefly falling to $97.57. U.S. West Texas Intermediate (WTI) crude also declined, losing $4.67, or 5.1%, to $87.68 a barrel, after touching a low of $86.72. This came a day after both benchmarks had surged nearly 5%, highlighting continued volatility in the market. U.S. President Donald Trump said yesterday (March 24), progress was being made toward ending the conflict, while sources confirmed that Washington had shared a detailed settlement plan with Iran. According to reports, the proposal includes a one-month ceasefire to allow discussions, dismantling Iran’s nuclear program, ending support for proxy groups, and reopening the Strait of Hormuz. The conflict has severely disrupted energy flows through the Strait of Hormuz, a critical route that typically handles about 20% of global oil and gas shipments. The International Energy Agency has described the situation as the largest oil supply disruption on record. Diplomatic efforts appear to be gaining traction. Pakistan’s prime minister has offered to host talks between the two sides. However, Iran stated earlier this week that it was not engaged in negotiations with the United States. Meanwhile, Iran informed international bodies that non-hostile ships could still pass through the Strait of Hormuz if they coordinate with Iranian authorities. Despite this, military actions have continued, with strikes reported from U.S., Israeli, and Iranian forces. Sources also indicated that Washington may deploy additional troops to the region. To compensate for reduced flows through the Strait, Saudi Arabia has increased oil exports from its Red Sea port in Yanbu to nearly 4 million barrels per day last week, a significant rise compared to pre-conflict levels. Markets remain highly sensitive to geopolitical developments, with traders closely watching whether diplomatic efforts will lead to a lasting de-escalation or further instability in global energy supplies.