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Brent Crashed 16% Overnight. Now the Hard Part Begins.
The two-week US-Iran ceasefire announced late on April 7 sent Brent crude plunging from $111 to roughly $93 a barrel within hours – the sharpest single-session drop since the war began on February 28. What the headlines called a peace dividend is, in practice, a conditional truce with a 14-day clock, an Iranian navy still coordinating passage through the Strait of Hormuz, and a Gulf energy infrastructure that Eurasia Group’s Henning Gloystein says will take months to repair regardless of what happens in Islamabad on Friday.
What the Tape Looked Like at 8 p.m. ET
Brent had been trading at $111.51 by early Tuesday morning, per Reuters, up another 1.6% on the day as Trump’s deadline hardened. WTI was at $115.86. Both benchmarks had nearly doubled since January, when WTI was still below $58 — the steepest year-to-date rally since 2008, Goldman Sachs’ commodities desk noted. Dated Brent, the physical benchmark tracked by S&P Global Platts, had peaked at $144.42, a recorded high that eclipsed even the 2008 crisis spike. That $144 peak was the culmination of a move flagged in late March: Brent’s steepest monthly gain on record, paired with Trump’s stated intention to seize Iranian oil revenues — a combination that told you exactly where the political floor under crude prices was sitting.
Then the ceasefire landed. Trump posted on Truth Social at 8:03 p.m. ET. Brent fell roughly 16% to around $93 a barrel, per Axios. WTI dropped approximately 19% to about $92. In percentage terms, a reversal of that magnitude in a single session has no clean precedent in the modern crude market.
But here is the thing that gets lost in the relief rally: $93 Brent is still $20 above where prices were on February 27. The war premium has been partially unwound, not erased. And the terms of this ceasefire give the market good reason to hold some of that premium for now.
The Strait Is “Open” — With Conditions
Iranian Foreign Minister Abbas Araghchi’s statement, issued on behalf of the Supreme National Security Council, said passage through the Strait of Hormuz would be possible “via coordination with Iran’s Armed Forces and with due consideration of technical limitations.” No further detail on what those limitations mean in practice was provided, as PBS NewsHour noted in its overnight coverage.
“Almost all of the various points of past contention have been agreed to between the United States and Iran,” Trump wrote, “but a two week period will allow the Agreement to be finalized and consummated.” That framing is telling. This isn’t a settlement — it’s a pause that both sides have agreed to frame as progress.
Compare that with what the Strait looked like a week ago. Ship transits had dropped from roughly 130 per day in February to six in March, according to a United Nations panel report cited by CBS News. At least 70 large empty crude tankers were anchored off the eastern coast of Oman. Iraq, Saudi Arabia, Kuwait, and the UAE had shut in an estimated 7.5 million barrels per day of crude production. TD Securities’ senior commodity strategist Ryan McKay, writing on April 3, called it “the largest supply disruption in the history of the global oil market.” Nearly one billion barrels of crude and refined products were set to be lost by month-end, his calculations showed.
A two-week opening — coordinated by the Iranian navy — is not a return to pre-war flow levels. It is a managed trickle that keeps Tehran’s leverage intact. The supply shock logic here is structurally similar to what drove copper to $14,527 a tonne earlier this year, when every major miner scrambled to front-run a disruption-driven squeeze — the difference being that copper’s chokepoint was a mine, not a 34-kilometre waterway controlled by a hostile military.
The Forward Curve and What Banks Are Saying
Before the ceasefire, the futures curve was already pricing Brent at $90 by August. Goldman Sachs, whose commodities analyst Daan Struyven raised the bank’s 2026 Brent average forecast to $85 in March, had modelled a base case of $71 Brent by Q4 assuming roughly six weeks of severely restricted Hormuz flows. That scenario is now partially in play — the disruption lasted just under six weeks. Their risk scenario, which assumed a two-month disruption, had Q4 Brent at $93. The EIA’s baseline, published this week, projects Brent falling below $80 by Q3 and toward $70 by year-end if the strait gradually normalises.
Don’t bet your book on that timeline. Gloystein at Eurasia Group said on Monday that shipping companies operating oil tankers in the region would need at least two months to resume operations even if a ceasefire holds from day one. Refineries and energy infrastructure damaged by strikes across the Gulf require months of repairs, not days. Saudi Aramco raised its Arab Light official selling price to Asia for May delivery to a record premium of $19.50 a barrel above the Oman/Dubai average before this ceasefire was announced — a figure that doesn’t unwind on a tweet.
JPMorgan had been the most aggressive voice on the upside. Their commodities team had cautioned that Brent could overshoot toward $150 a barrel if the Strait remained effectively closed into mid-May. That tail risk is now off the table for the next 14 days. Whether it stays off the table is the question your positioning needs to answer before the Islamabad talks conclude.
Gold’s Dilemma Hasn’t Gone Away
Gold spent most of Tuesday stuck between two competing narratives. Spot gold had been trading near $4,652, down from an intraday high of $4,706, before the ceasefire was announced, as FXStreet tracked. The metal has lost more than 11% since early March — its worst monthly performance in years — as surging energy prices pushed inflation expectations higher and compressed Federal Reserve rate-cut bets. That compression is the same bind that has paralysed the Fed for weeks: oil-driven inflation it cannot cut through, and a labour market too resilient to justify hiking into — a stagflation trap that makes every asset class harder to price cleanly, and gold most of all.
Fed funds futures now show a 40% chance of a rate hike by June, per Prime Market Terminal data cited by VT Markets, a figure that would have been unthinkable in January. The ceasefire creates a double-edged problem for gold. Safe-haven demand softens on de-escalation news — that’s the mechanical channel that drove bullion lower on ceasefire headlines last month. But if oil stays elevated during the two-week negotiation window because physical flows don’t normalise quickly, the inflation channel stays hot and the rate-cut channel stays closed. IG market analyst Tony Sycamore put it directly: “An end to the conflict could prove a double-edged sword for gold.”
The dollar side of that equation is equally unresolved. EUR/USD has been grinding lower under the weight of the same inflation-rates dynamic, and the ECB’s inability to recover the four cents EUR/USD shed in two months reflects a European economy absorbing the energy shock faster than dollar assets are — which mechanically supports a stronger dollar and keeps a ceiling on gold’s upside even as the war premium compresses. J.P. Morgan’s 12-month target remains $6,300 an ounce; Deutsche Bank is at $6,000. Both banks are pricing a world where this war eventually ends and the rate narrative swings back.
Fourteen Days Is a Very Short Runway
The Islamabad peace talks are scheduled for April 10. VP Vance is likely to lead the American delegation, per two sources cited by Axios. Iran’s 10-point proposal includes full sanctions relief, a permanent end to all regional conflicts, and a protocol for Hormuz passage — terms that a senior US official, per NPR’s overnight reporting, described as representing an extraordinary concession from Washington even to entertain.
“The problem,” an unnamed Pakistan official told Al Jazeera’s Osama Bin Javaid on Monday, “is essentially a schoolboy brawl. It is egos that they have to manage, and it is also a sea of distrust over which they have to build bridges.” Fourteen days won’t fix that. But it bought both sides a window.
Markets pricing a ceasefire extension need to weigh this: Trump has set hard deadlines on Iran three times since the war began on February 28. He extended all of them. On March 23, he pushed back a previous Hormuz ultimatum, citing “very good and productive conversations.” Iran’s foreign ministry denied talks had occurred. The pattern is not one that supports high-conviction positioning in either direction. What it does support is the kind of asymmetric information environment that preceded the February 28 strikes — when, as we covered at the time, six wallets on Polymarket had already positioned for the Iran strike and turned $60,000 into $1 million before the first missile landed. Prediction markets are now pricing a deal extension. They weren’t right the last time.
The Levels to Watch
Brent at $93 is the opening position. If Islamabad produces a framework extension before April 21, the EIA’s $80 by Q3 path becomes live. If talks stall — and Iran’s demand for full sanctions relief before a permanent deal gives Washington strong reasons to walk away — the $100-$110 range returns quickly. Physical flows need weeks, not days, to normalise even under ideal diplomatic conditions. The tanker fleet is anchored off Oman. Gulf production remains partly shut in. Supply normalization is a months-long process running parallel to a two-week diplomatic sprint.
Watch the spread between Brent and WTI as the key signal. It widened sharply during the worst weeks of the disruption because European and Asian buyers had no access to Gulf barrels. If that spread stays elevated after the ceasefire, you’re looking at a market that doesn’t believe physical flows are coming back fast. If it narrows quickly, the strait is genuinely reopening and the $80 path accelerates. The same European exposure that hurt the STOXX 600 through five weeks of war-premium inflation — the index lost 8% as the recovery trade became collateral damage of the Hormuz closure — now has the most to gain from a durable reopening. The market is pricing an uncertain middle. Whether it gets the clean reopening or the managed trickle depends entirely on what happens in a conference room in Islamabad on Friday.
Sources: Batimes, Economic Times, Nbcnews
