Just two hours before President Trump’s 8pm ET deadline, the U.S. and Iran agreed to a two-week ceasefire with Tehran pledging to immediately reopen the Strait of Hormuz. The accord buys time for the two sides to reach a longer-term deal to end the six-week conflict which has reportedly killed 5,300 people and sparked a global energy crisis. After brokering the ceasefire deal, Pakistan will host settlement talks in Islamabad on Friday. Despite the apparent truce, UAE, Kuwait and Bahrain subsequently reported extensive missile and drone attacks on their territories. Israel agreed to halt Iranian attacks but vowed to continue operations against Hezbollah in Lebanon.
On news of the ceasefire agreement, global energy prices plummeted and stock and bond prices soared. In early Wednesday trading, Brent futures touched a low of $91.70 (-16.1%) and WTI futures touched a low of $91.05 (-19.4%). European bonds have surged higher, with yields collapsing in a steep range of 14bps (Sweden) to an eye-popping 30bps (Italy).
The U.S. Energy Information Administration (EIA) predicted global fuel prices will continue to rise for months after the Strait of Hormuz reopens, even though EIA cut its estimate for ’26 global oil demand growth in half, from 1.2Mbpd to 600kbpd (to 104.6Mbpd total). Separately, the EIA’s Short-Term Energy Outlook forecast that after setting consecutive all-time highs in ’24 and ’25, total U.S. power consumption will continue to increase, from 4,195B kWh in ’25 to 4,244B kWh in ’26 and 4,381B kWh in ’27.
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