LONDON, April 8 (Reuters): Oil fell below $100 a barrel on Wednesday after US President Donald Trump said he had agreed to a two-week ceasefire with Iran, subject to an immediate and safe reopening of the Strait of Hormuz.
Brent crude futures were down $17.47, or 16 per cent, at $91.80 a barrel by 1205 GMT. WTI futures slid $20.33, or 18 per cent, to $92.62.
Benchmark European diesel prices also fell, shedding $317.25, or 20.8 per cent, to $1,210.50 a metric ton.
Trump's turnaround came shortly before his deadline for Iran to open the Strait of Hormuz or face widespread attacks on its civilian infrastructure. About 20 per cent of the world's daily oil supply passes through the narrow waterway.
"This will be a double sided CEASEFIRE!" Trump wrote on social media after posting earlier on Tuesday that "a whole civilization will die tonight" if his demands were not met.
Iran said it would halt its attacks if strikes against it stopped and that safe transit through the Strait of Hormuz would be possible for two weeks in coordination with Iranian armed forces, according to a statement by Foreign Minister Abbas Araqchi.
Iran could open the strait in a limited and controlled way on Thursday or Friday ahead of a meeting between US and Iranian officials in Pakistan, a senior Iranian official involved in the talks told Reuters on Wednesday.
In theory, the 10-13 million barrels per day of crude oil and product supply stranded behind the Strait of Hormuz should now be released gradually, said Tamas Varga, analyst at brokerage PVM Oil.
"Whether the pre-March status quo will be re-established depends entirely on whether the truce can be turned into a permanent peace during the negotiations in Pakistan," he added.
