Tehran and Washington have signed a 60-day ceasefire aimed at reopening the Strait of Hormuz. The deal sent oil prices down 3% in early trading. The ceasefire is meant to stabilize global oil markets by restoring passage through the critical waterway.
Why the strait matters
The Strait of Hormuz is a narrow channel connecting the Persian Gulf to the Gulf of Oman. A huge share of the world's crude oil moves through it every day. When the strait was effectively closed in recent weeks, tankers sat idle and insurance costs spiked, pushing oil prices higher. The ceasefire directly addresses that bottleneck.
How markets reacted
Brent crude futures fell about 3% on the news. Traders had been pricing in a risk premium tied to the blockade; the sudden de-escalation reversed some of those bets. The drop suggests investors believe the deal can hold, at least for the next two months.
What the 60-day timeline means
The ceasefire is explicitly temporary. Sixty days gives both sides room to negotiate a broader arrangement while keeping oil flowing. If the strait reopens fully within that window, the immediate supply shock disappears. If the truce collapses later, markets could swing just as fast in the other direction.
Neither government has released details on enforcement or verification. The agreement itself is short on specifics beyond the deadline and the shared goal of reopening the waterway.
The clock is now ticking. Both capitals have two months to make the temporary ceasefire stick and to prove they can keep one of the world's most vital shipping lanes open.
