WTI Posts Largest Single-Day Drop Since 1991 Gulf War as Iran Ceasefire Pulls War Premium

The Biggest Oil Drop in 35 Years

WTI crude went from a $117 intraday high to below $95 in a single session — the largest one-day oil price decline since the 1991 Gulf War. Brent dropped over 16% to $90.78. The catalyst was Trump's late-Monday confirmation that the U.S. and Iran had agreed to a two-week ceasefire, brokered by Pakistan, conditional on Iran's "complete, immediate, and safe opening" of the Strait of Hormuz.

Iran's Foreign Minister Araghchi confirmed the deal, committing to safe passage through the Strait "via coordination with Iran's armed forces." Trump said he had received a 10-point proposal from Iran he considered "a workable basis on which to negotiate." Israel also agreed to abide by the ceasefire. The market read it as the beginning of the end for the war premium that had pushed crude up 70% year-to-date.

Ceasefire on Paper, Hormuz in Practice

The Strait of Hormuz has been effectively closed to Western shipping since early March, when U.S. and Israeli strikes on Iran triggered retaliatory IRGC action in the waterway that handles roughly 20% of global seaborne oil. Over 150 ships anchored outside the Strait in the days after the closure. As of Monday, only about eight tankers a day were getting through — mostly under bilateral deals Iran struck with Asian-flagged nations including China, Russia, India, and Pakistan.

The first Western vessel to transit the Strait since the war began — a CMA CGM container ship — only crossed on April 3. A two-week ceasefire doesn't automatically restore commercial traffic to pre-war volumes. GasBuddy's analyst warned the deal likely means "another two weeks of status quo and barely anything getting through the Strait."

IEA member countries have committed to releasing a record 400 million barrels from emergency stockpiles, but that covers roughly 20 days of normal Hormuz flows — a bridge, not a solution.

Where the Premium Sits Now

Even after shedding 17%, WTI at $95 is still roughly 30% above its pre-war level near $73. Equity markets treated the ceasefire as a growth tailwind — S&P 500 futures jumped 2.5%, Dow futures rose 1,000 points, and Nasdaq 100 futures gained 3%. Gasoline still sits at $4.14/gallon and diesel at $5.64, near its 2022 high.

The spread between diplomatic progress and physical supply restoration is the variable that matters now. Every prior Trump deadline on Iran has been extended or reversed. If negotiations collapse after two weeks, crude snaps right back toward the $117 session high. If Hormuz actually reopens to full commercial traffic, $80s WTI is in play — a level the market hasn't seen since February.

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