U.S.-Iran Ceasefire Agreed; Strait of Hormuz Toll Demands Raise Concerns

The U.S. and Iran agreed to a two-week ceasefire on April 8, brokered by Pakistan, just minutes before President Donald Trump's deadline for Iran to open the Strait of Hormuz. The agreement sent oil prices plummeting and stocks soaring globally.

Oil prices dropped significantly following the announcement, with U.S. crude futures falling around 16% to $94.59 a barrel and Brent futures sliding 15% to $92.35 per barrel. The Dow Jones Industrial Average surged more than 1,000 points in early morning trade, while the Standard & Poor’s 500 leaped between 2.1% and 2.8%. Global assets staged a sharp rally, with equity indexes in Asian and European markets climbing between 4% and 5%, according to Reuters.

The ceasefire agreement came just minutes before Trump's deadline for Iran to open the Strait of Hormuz. As of Tuesday, ship tracker Kpler reported that approximately 187 laden tankers carrying 172 million barrels of crude oil and refined products were still trapped inside the strait. With more than 1,000 ocean-going vessels held up in the Gulf, clearing the backlog would likely take over two weeks even under normal conditions.

Iran's foreign minister, Abbas Araqchi, confirmed that Tehran would provide safe passage if attacks against it ceased, coordinating with its armed forces and considering technical limitations. However, Iran’s coastguards warned that any ship attempting to sail without permissions would be 'targeted and destroyed,' as reported by Reuters. The six-week conflict has sent oil prices soaring, reignited inflation fears, and thrown the global rates outlook into disarray.

The ceasefire deal is seen as a temporary relief, but analysts warn of likely twists and turns ahead. Investors remain cautious about taking new risks until there is evidence of lasting peace. According to Reuters, Iran attacked Saudi Arabia's East-West Pipeline just hours after the ceasefire was agreed to pause the Iran war. The pipeline was diverting around 7 million barrels per day (bpd) from the kingdom's oil heartland in the east to the Red Sea port of Yanbu after Iran effectively shut the Strait of Hormuz.

Investors placed an approximately $950 million bet on oil prices falling just hours before the U.S. and Iran announced a ceasefire, according to HuffPost. On Tuesday, investors sold a combined 8,600 lots of Brent and U.S. crude futures at 1945 GMT. The bet follows similar moves on March 23, when investors sold $500 million in oil futures just 15 minutes before an announcement by Trump that he would delay attacks on Iran’s energy infrastructure.

President Donald Trump warned Iranians that 'a whole civilization will die tonight' if Iran does not meet his deadline. Residents from Kuwait to Abu Dhabi heard alerts screech as air defenses again responded to incoming missiles, according to Reuters. Saudi Arabia’s East-West oil pipeline – its only major export route bypassing the Strait of Hormuz – was damaged in an Iranian attack, underscoring how even infrastructure designed to reduce reliance on Hormuz is vulnerable.

The ceasefire announcement was a significant surprise to market. A very one-sided Iranian 10-point plan released later by the supreme national security council of Iran seemed more like a US surrender. It would leave the current Iranian regime intact, Iran unsanctioned with its frozen offshore funds returned, free to enrich uranium, and with a revenue-collecting Strait of Hormuz toll booth. A detrimental outcome for the US, and scarcely unbelievable.

The resolve of both sides is about to be tested. What happens if a deal is not done? Then we could see the steepest escalation to date. Iran could be expected to expand attacks on Saudi and regional oil facilities, including Saudi’s east-west Pipeline, which redirects 5% to 7% of global oil to the Red Sea.

Oil tanker crews stranded in the Strait of Hormuz are suffering mental breakdowns with some refusing to sail even after it reopens. Terrified sailors fear they are 'sitting ducks' as they remain trapped in their stationary ships for a sixth week while Iran retains control over the passage. The reopening of the waterway, through which 20 per cent of global oil travels daily, is a crucial part of the two-week ceasefire agreed by Donald Trump and Iran.

But the Iranian regime has continued to block oil tankers transiting through the strait and has warned vessels they will have to pay a toll of up to $2 million per journey or face destruction - dashing hopes of a swift reopening. An estimated 2,000 ships and 20,000 seafarers have been trapped in the Gulf since the beginning of the war, sparking an enormous surge in oil prices worldwide.

Paralysed by fear after witnessing neighbouring ships set ablaze by Iranian missile attacks, some crew members say they won't sail through the strait even if it does open in a development which could spell further crisis for the global economy. One seafarer, stuck off the coast of the United Arab Emirates watched an Iranian missile strike a loaded Kuwaiti tanker, sparking a large blaze, while parked at a Dubai port last month.

They claimed 90 per cent of their crew will refuse to travel through the strait when it eventually opens. The worker said the threats of violence have caused an 'impossible' impact on their mental health. They told The Guardian: 'I’m in no mental condition to perform any intense task after all of this.' The sailor also claimed one of their colleagues had suffered a 'mental breakdown' and is being checked on regularly.

There remains chaos and confusion over who will get long-term control of the Strait of Hormuz. The Islamist regime has kept the Strait to traffic despite the US President declaring a dramatic and decisive victory in the Middle East. Iranian officials cited the ongoing Israeli attacks on Iran's Hezbollah allies for the move to shut off the Arabian Gulf which sent oil prices soaring and stock prices falling again.

Trump responded by threatening to green-light 'bigger, and better and stronger' attacks on Iran if a permanent deal isn't reached. But he had earlier suggested the US and Iran could work together on a toll regime for ships that could reach $2 million per vessel.