Oil prices fall as Iran agrees to reopen Strait of Hormuz during ceasefire

Oil prices fell sharply Wednesday morning amid news Iran has agreed to reopen the Strait of Hormuz as part of its two-week-long ceasefire with the United States.

But when that will translate to price drops at Canadian gas pumps remains unclear as shipping companies scramble to get their products to market.

Benchmark U.S. crude sank US$16.47 to US$96.48 a barrel Wednesday morning; Brent crude, the international standard, dropped US$13.79 to US$95.48 a barrel.

The national average for regular, unleaded gas in Canada was $1.82.4 per litre Wednesday morning – an increase of two cents from Tuesday, CAA data showed.

The drops reversed some of the rise in oil prices, following the start of the war in late February, which had effectively blocked passage through the strait that’s a crucial route for global supplies.

Late Tuesday, Trump said he was holding off on his threatened attacks on Iranian bridges, power plants and other civilian targets. Iran’s foreign minister said passage through the strait would be allowed for the next two weeks under Iranian military management.

Tim Waterer, chief market analyst at KCM Trade, told The Associated Press the development has sparked “cautious optimism” rather than “outright celebration.”

“The ceasefire is only two weeks long, and markets will be watching closely to see whether shipping through the Strait of Hormuz normalizes as promised and whether the fragile truce can pave the way for a more durable peace agreement,” he added.

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Trump acknowledged late Tuesday a 10-point proposal from Iran on ending the war, which he called “a workable basis on which to negotiate” a long-term peace deal despite rejecting it a day earlier. Iran’s clauses included an end to conflicts in the region, a protocol for safe passage through the Strait of Hormuz and lifting of sanctions and reconstruction.

Prime Minister Benjamin Netanyahu said in a statement Wednesday that Israel backed the U.S. ceasefire with Iran but that the deal doesn’t cover fighting against Hezbollah in Lebanon.

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His office said Israel also supports U.S. efforts to ensure Iran no longer poses a nuclear or missile threat.

Earlier Tuesday, Trump warned that “a whole civilization will die tonight” if Iran did not meet his deadline of 8 p.m. Eastern to agree to a deal with the U.S. and reopen the Strait of Hormuz.

“I don’t want that to happen, but it probably will,” Trump said in a Truth Social post Tuesday morning, 12 hours ahead of his deadline.

However, he added that there was potential for something “wonderful” to happen in Tehran.

“However, now that we have Complete and Total Regime Change, where different, smarter, and less radicalized minds prevail, maybe something revolutionarily wonderful can happen, WHO KNOWS?” he added.

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Carney urges ‘all parties’ in Iran war to ‘respect international laws’

Iranian officials had vowed “an unforgettable hit” and “immediate and proportionate reciprocal measures” if Trump carried through with his threats. Iranian President Masoud Pezeshkian took to social media on Tuesday to announce that he had registered for military service, along with 14 million Iranians.

Pakistan, which was working towards mediating a ceasefire, urged Trump to extend his deadline and Iran to open the Strait of Hormuz.

Trump’s threat against Iran’s civilization came after he vowed to bomb every Iranian power plant and bridge over the weekend unless Iran, and dismissed concerns that such actions could amount to a war crime.

Volker Türk, the United Nations high commissioner for human rights, called Trump’s latest threats “sickening” in a statement.

Prime Minister Mark Carney said Tuesday that Canada “expects all parties in this conflict” to respect international law.

“That means not targeting, certainly, civilians or civilian infrastructure. And we urge all parties in this war to follow those responsibilities as a point we’ve made publicly and privately,” he said.

Trump’s shifting deadlines for the conflict had raised uncertainty over where the conflict was headed as it entered its second month.

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On March 21, Trump issued his first ultimatum to Tehran, giving them 48 hours to allow ships to pass through the Strait of Hormuz, which Iran had blocked in response to U.S. and Israeli strikes.

Trump posted on Truth Social that if Iran doesn’t “FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS.”

Iran had until the evening of March 23.

However, 12 hours before that deadline, Trump took to Truth Social again to announce that he had decided to postpone the strikes against Iran.

“I HAVE INSTRUCTED THE DEPARTMENT OF WAR TO POSTPONE ANY AND ALL MILITARY STRIKES AGAINST IRANIAN POWER PLANTS AND ENERGY INFRASTRUCTURE FOR A FIVE DAY PERIOD,” he wrote, adding that was subject to the success of the discussions.

That pushed the deadline out to the end of that week.

On March 26, just before the deadline, Trump first doubled down on his threats, adding that there was “NO TURNING BACK.”

Later that day, however, he postponed his deadline another 10 days to April 6 at 8 p.m. Eastern.

On March 30, Trump put celebrating progress in the talks with Iran while also expanding his threatened bombing if a deal wasn’t “shortly reached,” adding that “it probably will be.”

“We will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalinization plants!),” he wrote.

On Easter Sunday, in an expletive-laden post on Truth Social, Trump threatened Iran’s power plants and bridges if they did not open the Strait – and extended his deadline once again for 24 hours.

“Tuesday will be Power Plant Day, and Bridge Day, all wrapped up in one, in Iran. There will be nothing like it!!!” Trump said, warning Iranians to “open the Fuckin’ Strait, you crazy bastards, or you’ll be living in Hell – JUST WATCH!”

Shortly after that, he simply posted: “Tuesday, 8:00 P.M. Eastern Time!”

He confirmed to reporters Monday that the time referred to his final deadline.

— with files from Reggie Cecchini and the Associated Press and Reuters