Oil plunge cools inflation fears, but pension portfolios still face a two‑week risk window
Oil just plunged more than 15 percent on a two‑week ceasefire in the Strait of Hormuz, but the same politics that delivered relief could just as quickly re‑ignite an energy shock that hits inflation, returns and funding ratios.
According to CNBC, US President Donald Trump agreed to suspend attacks on Iran for two weeks in exchange for the “COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz,” calling it a “double sided CEASEFIRE.”
The announcement came less than two hours before his 8 pm ET deadline for Iran to reopen the Strait or face strikes on bridges, power plants and other civilian targets.
Markets moved fast.
West Texas Intermediate for May delivery fell more than 16 percent to about US$94.47 per barrel, while Brent for June dropped more than 15 percent to about US$92.21.
Another CNBC report said WTI later tumbled about 18 percent to under US$93, while Dow, S&P 500, and Nasdaq futures jumped roughly 2 percent or more.
The Associated Press similarly reported that US crude futures fell 14.3 percent to US$96.83 and Brent dropped 13.3 percent to US$94.74, alongside S&P 500 futures up 2.3 percent and Dow futures up 2 percent.
The ceasefire addresses the core of the recent oil shock.
CNN reported that the war, which began when the United States and Israel attacked Iran on February 28, and the effective closure of the Strait of Hormuz together created “the biggest oil supply shock on record,” disrupting an estimated 12m to 15m barrels of crude per day.
About 20 percent of global oil normally moves through the Strait.
Iran now plans to allow safe passage for ships during the ceasefire “via coordination with Iran’s Armed Forces and with due consideration of technical limitations,” its foreign minister said in a statement reported by CNBC.
According to CNN, Iran’s Supreme National Security Council later declared that the United States had accepted its principles as the basis for negotiations and framed this as a political victory, while stressing that the truce is temporary.
Trump presented the deal as a step toward a broader agreement.
As per CNBC, he said the United States had received a 10‑point proposal from Iran and described it as “a workable basis on which to negotiate,” claiming that almost all past points of contention had been agreed and that two weeks would allow the agreement to be “finalized and consummated.”
The proposal includes withdrawing US combat forces from regional bases, lifting sanctions, releasing frozen Iranian assets, paying war‑related damages and creating a protocol for controlled passage through the Strait.
Those assurances follow weeks of extreme rhetoric.
NBC News said Trump had threatened to bomb every bridge and power plant in Iran and warned that “a whole civilization will die tonight, never to be brought back again” if Tehran did not meet his deadline.
AP reported that repeated threats and last‑minute pauses fuelled violent swings in oil and equities.
The impact at the pump and on inflation expectations is already visible.
NBC News reported that average US gasoline prices reached US$4.14 per gallon on Tuesday, up from below US$3 just days before the February strikes, while diesel hit US$5.64, close to its 2022 high of US$5.82.
The US Energy Information Administration expects further pressure, forecasting a monthly average peak near US$4.30 per gallon for gasoline in April and diesel “at more than $5.80/gal.”
Policy makers have taken notice.
Reuters reported that Chicago Fed President Austan Goolsbee said he is worried the war could create a stagflationary shock by driving inflation higher and growth lower, putting the central bank in a bind.
In an interview with BNN Bloomberg before the ceasefire, Brian Mulberry, chief market strategist at Zacks Investment Management, said that without “agreement or concessions from Iran,” further escalation could drive oil above US$123.70 and toward US$140 to US$150 per barrel.
He linked that range to prices during the Ukraine conflict and said it would worsen the current energy shock.
He highlighted US$124 as a key technical resistance level, telling BNN Bloomberg that a break above could mean another 15 percent to 20 percent upside toward US$140.
On the downside, Mulberry told the outlet that a deal preventing an attack and restoring tanker traffic through the Strait could send oil toward US$90, which he said would be “deflationary relatively quickly” as flows normalize.
He noted traffic had improved to about 20 to 30 ships a day but remained below typical volumes.
Mulberry also pointed to refiners as a potential hedge, he said that “one of the biggest hedges against an oil shock is owning refining stocks,” and citing Chevron, Exxon and ConocoPhillips, whose shares he said had risen about 25 percent to 30 percent alongside crude.
He argued that limited new refining capacity in the Western Hemisphere has left these companies near full capacity and well positioned if elevated prices persist.
Yet analysts remain cautious about calling a turning point.
Société Générale wrote that the situation has hardened into “two divergent paths”—either a fragile détente with gradual supply recovery or a protracted conflict with structurally higher risk premia and stockpiling—according to NBC News, and said US signalling “now leans toward the latter.”
