Biggest single-day drop in two weeks
Oil prices tumbled more than 5% on Wednesday after the Trump administration unveiled a 15-point ceasefire plan aimed at ending the four-week-old war with Iran. WTI crude fell as low as $87.50 a barrel before recovering to around $90.29. Brent sank to $98.03 at its session low and last traded near $102.06.
The sell-off wiped out roughly a week of gains. Traders dumped the risk premium that has kept oil above $90 since US and Israeli forces launched strikes on Iran on February 28.
What the plan asks for
The proposal, delivered to Tehran through Pakistani intermediaries, lays out sweeping demands. Iran would have to dismantle its three main nuclear facilities at Natanz, Isfahan, and Fordow. All enriched uranium would be transferred to the International Atomic Energy Agency. Tehran would also need to suspend its ballistic missile program and cut funding to Hezbollah, the Houthis, and other armed groups.
The Strait of Hormuz, which Iran has effectively shut to non-allied shipping since early March, would have to reopen.
In exchange, Washington offered to lift nuclear-related sanctions, assist Iran's civilian power program at the Bushehr plant, and scrap the snapback mechanism that allows automatic reimposition of UN sanctions.
Pakistan's army chief, Field Marshal Syed Asim Munir, carried the document to Iranian officials. Prime Minister Shehbaz Sharif said his country stood "ready and honoured to be the host to facilitate meaningful and conclusive talks."
Iran said no
The response came fast. State broadcaster Press TV reported that Tehran rejected the proposal outright, citing an unnamed official. Iran issued five counter-demands: a halt to all US-Israeli strikes, guarantees against future attacks, war reparations, an end to operations against Hezbollah and allied militias, and international recognition of Iranian authority over the Strait of Hormuz.
An Iranian military spokesperson was blunter. "Don't dress up your defeat as an agreement," he said.
Trump pushed back on social media, insisting he was talking to "the right people" and that Iranians were "eager" to reach a deal.
Markets moved fast, then second-guessed themselves
The initial reaction was sharp. WTI dropped 14% on Sunday when Trump first signaled willingness to talk. Wednesday's additional 5.5% slide took prices to their lowest point since early March.
But the bounce-back started before the close. Iran's rejection, paired with its vague offer to let "non-hostile" ships through Hormuz, reminded traders that the war premium is not going away overnight. Only five vessels crossed the strait on Monday, down from 120 a day before the conflict.
Gold surged 3.5% to $4,553.80 an ounce as investors hedged against the possibility that diplomacy stalls. European equities rallied, with the DAX gaining 1.7% and Tokyo's Nikkei 225 jumping 2.9%.
What comes next
The gap between the two sides looks vast. Washington wants full nuclear dismantlement. Tehran wants war reparations and sovereignty over the strait. Pakistan remains willing to host talks, but neither side has agreed to sit down.
OPEC+ meets on April 5 to discuss adding 206,000 barrels a day to output. If diplomacy gains traction and Hormuz traffic recovers even partially, the combined effect could push prices below $80. For now, traders are stuck between hope and a war that has already cut Gulf oil flows by more than 90%.