Will fuel prices drop in France? Temporary ceasefire agreement between Iran and…

The United States and Iran have agreed late Tuesday to a temporary 14-day ceasefire, aimed at facilitating negotiations for a long-term cessation of hostilities. The Strait of Hormuz is expected to once again be open for the passage of hydrocarbons, after over a month of energy crisis.

Oil prices dropped by nearly 15% on Wednesday, April 8, after Donald Trump postponed his ultimatum against Iran and Tehran expressed willingness to negotiate. This development brought relief to the markets as oil prices fell below $100.

At around 05:00 GMT, the price of West Texas Intermediate (WTI) for delivery in May, the American benchmark for crude oil, plummeted by 14.53% to $96.54. Meanwhile, the price of Brent crude for delivery in June, the global benchmark, fell by 13.13% to $94.92.

“I agree to suspend bombings and attacks against Iran for two weeks,” announced the American president on his Truth Social platform just over an hour before the deadline, following discussions with Pakistani mediators. He indicated readiness for a ceasefire if Iran fully reopens the Strait of Hormuz.

In turn, Tehran announced negotiations with the American side to end the war starting on Friday in Islamabad for two weeks, agreeing to reopen the Strait of Hormuz if Israeli-American attacks cease.

Investors had been eagerly awaiting encouraging news, with about a fifth of the world’s oil usually passing through the strategic strait, most of which had been halted by Iranian actions. Prior to these announcements, the price of WTI had soared by about 70% since the beginning of the war in late February.

“A once imminent escalation turned into a conditional two-week ceasefire by the White House has smoothed out the oil market, with the disappearance of the recent ‘risk premium’,” noted Stephen Innes from SPI Asset Management.

However, a sustainable decrease in prices will require more than just diplomatic statements, warned Michael Brown from Pepperstone. It will necessitate a visible resumption of traffic in the Strait of Hormuz for a lasting evaluation of prices.

In France, consumers may expect a reduction in pump prices by “5 to 10 cents in the coming days,” according to the French Union of Petroleum Industries President Olivier Gantois, as a direct consequence of the ceasefire. This comes amidst a backlog of 3,000 ships awaiting passage through the Strait of Hormuz.