Global markets experienced a dramatic shift on Wednesday as oil prices plunged nearly 15% and stock markets rallied after US President Donald Trump agreed to a two-week ceasefire with Iran, temporarily averting threatened military strikes. The agreement, announced less than two hours before Trump's deadline for Iran to reopen the strategic Strait of Hormuz, eased fears of a prolonged energy disruption and sparked a broad relief rally across equities, bonds, and commodities.

Oil Prices Plunge, Markets Rally

US crude futures dropped about 16.5% to $94 a barrel, while Brent crude, the international benchmark, fell 14.4% to $93.48, according to The Guardian. The West Texas Intermediate (WTI) barrel traded 16% lower than the previous day, and Brent was 15% lower, as reported by the Jerusalem Post. The price decline marked a sharp reversal from the record spikes seen earlier in the month when Iran effectively closed the strait, which carries about one-fifth of global oil and gas supplies.

The S&P 500 opened 0.1% higher on Wednesday, recovering from the previous day's fall, and futures pointed to gains across Asia and Europe. Japan's Nikkei 225 jumped about 5%, South Korea's KOSPI vaulted 6%, triggering a brief trading halt, and Dubai's main market spiked 8.5%, its biggest intraday gain in over 11 years, according to the Jerusalem Post.

Ceasefire Details and Reactions

President Trump announced the ceasefire late Tuesday, saying he had agreed to suspend attacks on Iran for two weeks and that Iranian officials had expressed openness to a deal. Iran's foreign minister confirmed that passage through the Strait of Hormuz would be allowed for the next two weeks under the management of its military, as reported by The Guardian.

Iran's national security council accepted the two-week ceasefire, and peace negotiations with the US are scheduled to begin in Islamabad on Friday. However, maritime intelligence firm Windward noted in an April 9 note that "the ceasefire has not reopened the Strait of Hormuz, and transit remains tightly controlled," with movement of vessels coordinated by the Iranian Islamic Revolutionary Guard Corps rather than standard commercial lanes.

Fragile Truce and Renewed Tensions

The initial optimism proved short-lived as concerns about the ceasefire's durability grew within 24 hours. Oil prices rose again on Thursday, with Brent crude climbing more than 2% to $96.77 a barrel, after Israel launched a wave of strikes on Lebanon and Tehran warned of a "regret-inducing response" if the attacks continued, as reported by The Guardian and BBC.

The UAE and Kuwait said their air defences had intercepted drones from Iran, and Iran's parliament speaker accused Israel and the US of violating the agreement. The Fars news agency reported that oil tanker passage through the strait had been halted due to Israel's strikes on Lebanon, which killed at least 254 people.

President Trump posted on his Truth Social platform that US forces would "remain in place in, and around, Iran, until such time as the REAL AGREEMENT reached is fully complied with," threatening stronger military action if not.

Market Sentiment and Outlook

Despite the volatility, analysts noted that the two-week pause provided "an off-ramp for Trump's overly bombastic ultimatum, but not yet an off-ramp for oil markets or the war," as Saul Kavonic of MST Financial told Reuters. The 11 million barrels per day of upstream production shut in across the Middle East can only be restored once export logistics normalise, and shipping data shows most vessels in the Persian Gulf remain stationary.

"Markets can worry about the complexities later. For now, they've been given the green light to rally," said Matt Simpson, senior market analyst at StoneX. However, the fragile nature of the truce and the unresolved management of the Strait of Hormuz left many investors cautious.

In Asia, Japan's Nikkei fell 0.7% on Thursday, reversing earlier gains, while European markets also slipped, reflecting lingering uncertainty. Bond yields declined as falling oil prices eased inflation concerns, but the dollar remained under pressure after serving as a safe haven during the turmoil.

The ceasefire marks a critical turning point, but as The Guardian noted, "how the strait will be reopened and managed beyond the two-week grace period is yet to be determined." For now, markets are watching closely to see if the truce holds and whether oil flows can resume freely through one of the world's most vital shipping lanes.