Global oil prices have nosedived after President Donald Trump announced a two-week ceasefire with Iran – offering a much‑needed reprieve for hard‑pressed Britons facing surging fuel costs. In the hours following his statement on Tuesday night, the price of US‑traded crude slumped almost 16.5 per cent to $93.80 per barrel, while benchmark Brent crude dropped 15.9 per cent to $92.30.

Trump suspends strikes ‘for a period of two weeks’

In a post on his Truth Social platform, Trump said he would halt strikes on Iran’s territory if Tehran agreed to fully reopen the Strait of Hormuz – the vital chokepoint for global oil and gas shipments. “Subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz, I agree to suspend the bombing and attack of Iran for a period of two weeks,” he wrote, describing the agreement as a “double‑sided ceasefire”.

Trump said the US had received a “10 point proposal” from Iran that he believes offers a workable basis for a longer‑term settlement. He claimed that “almost all of the various points of past contention have been agreed” between Washington and Tehran and that the two‑week pause would allow the deal to be finalised and “consummated”.

Strait of Hormuz: world’s oil artery reopens – for a price

The Strait of Hormuz, off the coast of Iran and Oman, is one of the most strategically important waterways on the planet. Around 20 per cent of the world’s petroleum and roughly a quarter of its liquefied natural gas normally pass through the narrow Gulf corridor, with an estimated 20.3 million barrels of crude and refined products moving through every day.

Its closure after the outbreak of conflict on 28 February sent shockwaves through global markets and helped drive fuel prices sharply higher. Iran has now confirmed it will allow tankers and other ships to pass safely during the two‑week ceasefire – but only “for a fee”. Foreign Minister Abbas Araghchi said safe passage would be possible via coordination with Iran’s armed forces and “with due consideration of technical limitations”.

Relief at the pumps – but prices still painfully high

Despite the plunge in wholesale prices, petrol and diesel costs at UK forecourts remain well above pre‑war levels. RAC data released on Tuesday showed petrol had jumped 3p per litre in just five days to an average of 157.02p – already around 24p higher than before the Iran crisis erupted. Diesel drivers have been hit even harder, with prices rocketing from 142.38p at the end of February to 189.42p, and warnings they could breach 190p a litre.

The latest fall in global oil benchmarks is expected to ease some of the pressure and may slow or partially reverse recent hikes, but analysts caution that the market remains fragile and that pump prices tend to lag big moves in crude. Campaigners have already warned of “panic at the pumps” in recent weeks as supply jitters and geopolitical fears fed into cost‑of‑living worries across the UK.

Analysts warn of ‘sticky’ high prices and damaged infrastructure

Andrew Lilley, chief rates strategist at Australian investment firm Barrenjoey, welcomed the ceasefire boost but warned there is still “a long way to get back to where we were before this began”. He said markets are now questioning how far prices can fall back towards $75 a barrel and raised the risk of a new equilibrium where oil trades stubbornly around $90 despite normal flows through Hormuz.

“This little precipice where actually oil is flowing, no one has a shortage, but it stays at an equilibrium price of $90, that is actually where you remove the tail risk that central banks are cutting,” he explained. In that scenario, damaged infrastructure and a “sticky” high oil price for months could keep inflation elevated and bond yields “permanently high”, complicating efforts by central banks to deliver interest rate cuts.

‘Good enough for now’ – but is trouble just delayed?

Brian Jacobsen, chief economist at Annex Wealth Management, said Trump’s move was “enough to keep hopes alive that not only will an entire civilisation not be destroyed, but we could see oil start flowing through the Strait of Hormuz”. He cautioned, however, that the ceasefire might simply be “kicking the can down the road” and that tempers could flare again if talks stall.

“Is it just kicking the can down the road, moving the goal posts, ‘Taco Tuesday’, or whatever metaphor we’d like, only to have tempers flare and bombs drop again? Who knows?” Jacobsen said, adding that for now the move has been “good enough to elicit a positive response from the markets”. Investors, motorists and policymakers will all be watching closely over the next two weeks to see whether the ceasefire holds – and whether Trump’s promised path to a broader agreement with Iran really materialises.