Global oil prices saw significant drops on 8/4 following an announced ceasefire between the US and Iran. US crude WTI futures at one point plunged nearly 19% to 91,64 USD per barrel, before stabilizing around 96 USD. Brent crude also fell 15%, trading near 93 USD.

The market downturn came after US President Donald Trump announced an agreement for a two-week ceasefire with Iran, contingent on Tehran reopening the Strait of Hormuz. Iran's Supreme National Security Council confirmed its approval of the ceasefire.

WTI crude oil price movements over the past year. Chart: Trading Economics

According to Iran's Foreign Minister Abbas Araghchi, passage through the Strait of Hormuz is permitted for these two weeks, under the management of the Iranian military. He stated Iran would cease attacks if military actions against the country concluded. Iranian state media reported that talks with the US are scheduled in Pakistan on 10/4.

These announcements were made less than two hours before a US ultimatum to Iran expired. The ultimatum demanded the Gulf nation agree to reopen the Strait of Hormuz by 8 p.m. Eastern time (7 a.m. Hanoi time on 8/4) to avoid devastation of its civilian infrastructure.

The conflict in the Middle East, which had lasted over one month, disrupted 20% of global oil and liquefied natural gas flows due to the blockade of the Strait of Hormuz. This disruption led to a surge in global prices for crude oil, jet fuel, diesel, and gasoline. Crude oil had approached 120 USD per barrel early last month.

Meanwhile, in the gold market, global prices surged by 137 USD to 4,849 USD per ounce.

Global gold prices surged on the morning of 8/4. Chart: Kitco

Gold prices rose as the likelihood of central banks cutting interest rates improved. Recently, the precious metal had faced pressure, with prices falling about 10% since the conflict began, as the unrest drove global inflation higher and made countries hesitant to ease monetary policy.

The market awaits the minutes from the US Federal Reserve's (Fed) March meeting, to be released today. In the physical market, China's Central Bank purchased additional gold reserves for the 17th consecutive month.

Beyond gold, other precious metals also saw gains. Silver, platinum, and palladium prices increased by 1-2% compared to yesterday.

Ha Thu (from CNBC, Reuters)