LONDON: The Pakistan-brokered ceasefire between Iran and the United States should bring some relief to a world economy that has been roiled since the start of the conflict on February 28, even if not all sectors will rebound at the same pace.
Oil prices
The ceasefire sent oil prices tumbling, with the main international contracts falling below $100 a barrel.
That should bring relief for retail customers at the pump, where surging petrol prices in recent weeks have forced many countries to take measures to reduce consumption and protect the most vulnerable.
In France, fuel prices could fall by “5 to 10 cents” per litre “very quickly,” Olivier Gantois, president of the French Union of Petroleum Industries (Ufip), told AFP.
Opening of Hormuz
Two ships, one Greek-owned and the other flying the Liberian flag, have already transited the Strait of Hormuz since Iran agreed to reopen the strategic waterway, through which approximately 20 percent of the world’s crude oil and liquefied natural gas normally passes.
Even with falling oil prices, there will not soon be more physical supply passing through the Strait of Hormuz, given widespread damage to oil and gas infrastructure throughout the Gulf.
Stock markets
Stock markets soared and European government borrowing rates plummeted on news of the ceasefire.
“If we quickly return (to February levels), the macroeconomic impact and the impact on budgets won’t be very significant, I’d say almost negligible,” Claudia Panseri, chief investment officer at UBS Wealth Management France, told AFP.
“If, however, in two weeks, we find ourselves in a situation where there is no agreement, if the price of oil rises back to $100 a barrel, and if gas remains at high levels,” the impact on inflation and growth will be more pronounced, Panseri said.
Optimism after ceasefire announcement
On Wednesday, early morning, Pakistan’s Prime Minister Shehbaz Sharif announced that the United States, its allies, and Iran had agreed to a ceasefire “everywhere”, including Lebanon, following mediation by his government to stop weeks of fighting.
“I am pleased to announce that the Islamic Republic of Iran and the United States of America, along with their allies, have agreed to an immediate ceasefire everywhere, including Lebanon and elsewhere, EFFECTIVE IMMEDIATELY,” Sharif posted on X.
With the greatest humility, I am pleased to announce that the Islamic Republic of Iran and the United States of America, along with their allies, have agreed to an immediate ceasefire everywhere including Lebanon and elsewhere, EFFECTIVE IMMEDIATELY.
I warmly welcome the…— Shehbaz Sharif (@CMShehbaz) April 7, 2026
He added that Pakistan’s capital, Islamabad, would welcome delegations from both countries on Friday to hold negotiations aimed at reaching a “conclusive agreement”.
“We earnestly hope that the ‘Islamabad Talks’ succeed in achieving sustainable peace and wish to share more good news in the coming days,” he said.
Both Tehran and Washington announced they had agreed to a two-week ceasefire barely an hour before President Donald Trump’s deadline to obliterate Iran was set to expire.
Accepting Pakistan’s suggestion of a two-week ceasefire, US President Donald Trump announced a two-week suspension of military action against Iran following discussions with Pakistan’s leadership.
