US and Iran Agree to Ceasefire, Stocks Soar in Global Relief Rally as Oil Plunges

The US and Iran agreed to a two-week ceasefire and Tehran pledged to reopen the Strait of Hormuz, a last-ditch deal that saw President Donald Trump back off from threats to escalate the war.

Trump announced the agreement on Tuesday night, shortly after mediator Pakistan implored him to rethink his deadline to unleash massive devastation on Iran if it didn’t meet his demands. While it wasn’t clear on Wednesday when the truce takes effect — with reports of ongoing hostilities rife across the Persian Gulf — the accord helped ease fears of a protracted global crisis.

Oil and gas prices plummeted on news of a deal, which paves the way for a resumption of energy supplies through Hormuz. The critical waterway — through which about fifth of oil and liquefied natural gas supplies typically flows — has been effectively shut for the duration of the near six-week conflict.

Bloomberg News Middle East Reporter Golnar Motevalli joins Tom Keene and Paul Sweeney on “Bloomberg Surveillance Radio” to discuss whether there is a path towards an indefinite ceasefire in Iran. The US and Iran said they are prepared to hold talks to end the war in the Middle East during a proposed two-week pause in hostilities, even as Israeli strikes on Lebanon threatened to derail the fragile truce.

Further adding uncertainty, sporadic fighting continued throughout the region and the Strait of Hormuz remained largely blocked. President Donald Trump has said that reopening the strait was a condition for halting the fighting.

Trump’s announced ceasefire Tuesday night was a retreat from threats to unleash massive devastation on Iran, easing fears of a protracted global energy crisis. Mediator Pakistan has floated negotiations later this week in Islamabad, and Trump said they could start very soon, according to the New York Post.

Yet there were already signs that the agreement was buckling. Iran said it would withdraw from the deal if Israel kept up attacks in Lebanon, according to the semi-official Tasnim news agency. Passage of oil tankers through the strait were halted after Israel’s attacks, the semi-official Fars news agency reported.

The White House didn’t immediately respond to a request for comment on whether the president views the war front in Lebanon as included in the ceasefire.

Trump made a series of dubious claims about the terms of the agreement in a social media post on Wednesday morning. He said the Islamic Republic has gone through a “regime change,” even though there have been no signs this week that new leadership had taken hold.

He also indicated the US would use its own 15-point plan as the basis of negotiations with Tehran, after saying Tuesday the sides would begin discussions off of Iran’s 10-point proposal. Nonetheless, he said t The shift to diplomacy came as countries including Kuwait, Bahrain and the United Arab Emirates, as well as Israel, reported ongoing missile attacks into Wednesday, sewing confusion about when and how the ceasefire would be enforced. Saudi Arabia’s oil pipeline to the Red Sea was hit by a drone strike, according to a person familiar with the matter.

Further uncertainty surrounded whether the ceasefire includes Israel’s campaign in Lebanon, where the country is waging a parallel war against the Iran-aligned Hezbollah militia.

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