Investors are cheering US President Donald Trumpโs ceasefire announcement and Iranโs declaration that it will allow ships to transit through the Strait of Hormuz, which could eventually translate into lower petrol prices for motorists.
In the 20 minutes after the Presidentโs Truth Social posting on Wednesday morning AEST, the price of West Texas crude โ which was around $US108 ($153) a barrel, fell by more than 15 per cent. It is now around $US96 ($136) a barrel.
That will not translate to petrol prices immediately but is expected to bring relief if it lasts.
Iranโs Minister of Foreign Affairs Seyed Abbas Araghchi announced in response to Trumpโs two week ceasefire that โsafe passage through the Strait of Hormuz will be possible via coordination with Iranโs armed forces and with due consideration of technical limitations.โ
There has also been a big shift on currency markets. The Australian dollar, for instance, has climbed by more than a percentage point. It was below US70 cents ahead of Trumpโs post but is now US70.6 cents.
Commodities such as gold and silver have lifted in value as investors now start focusing on the fallout from a possible end to the war.
More to come.
Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via X or email.
