In a dramatic eleventh-hour development, Donald Trump announced a two-week ceasefire with Iran on Tuesday night, stepping back from earlier threats of large-scale military action that risked escalating the conflict.

The announcement came less than two hours before his self-imposed 8 PM ET deadline, where he had warned Tehran to reopen the Strait of Hormuz or face devastating consequences.

The provisional agreement, reportedly brokered primarily by Shehbaz Sharif and influenced by last-minute diplomatic pressure from China, brought cautious global relief.

Earlier in the day, tensions had escalated significantly, with threats posted on Truth Social and reports of airstrikes on Iranian infrastructure, including bridges, a train station, and oil facilities on Kharg Island. Missile alerts were activated across different entities and the United Arab Emirates.

At the center of the crisis was Iran’s effective chokehold on the Strait of Hormuz, a route responsible for roughly one-fifth of global oil supply. The disruption pushed U.S. crude oil prices to $116 per barrel and rattled financial markets worldwide.

Negotiations led by U.S. officials, including JD Vance, Jared Kushner, and Steve Witkoff, focused on reopening the waterway and addressing broader concerns such as Iran’s nuclear enrichment program and regional military influence.

Following intense diplomatic engagement, Iran submitted a 10-point peace proposal, initially dismissed by Trump but later described as a workable basis for negotiations.

The provisional ceasefire includes a suspension of military operations for two weeks while Iran allows safe passage through the Strait, with Abbas Araghchi confirming coordinated transit for vessels. Benjamin Netanyahu also agreed to halt strikes on Iran during the period, excluding operations involving Hezbollah.

Global Markets React as Ceasefire Brings Cautious Relief

The announcement triggered immediate movement across global markets. U.S. crude prices dropped more than 15 percent to around $95 per barrel, later falling below $93, marking one of the steepest one-day declines since the Gulf War.

Brent Crude also declined sharply, while natural gas and heating oil prices eased. Stock markets surged, with Dow Jones Industrial Average futures rising by 1,000 points, Nasdaq 100 gaining nearly three percent, and S&P 500 futures climbing over 2.5 percent.

Treasury yields softened, easing pressure on mortgage rates, though economists warned that long-term stability would depend on whether the ceasefire holds beyond the temporary window.

Reactions to the ceasefire varied globally and domestically. In the United States, Democratic leaders, including Chuck Schumer, Hakeem Jeffries, and Alexandria Ocasio-Cortez, criticized earlier threats, while Republican figures such as Rick Scott and Lindsey Graham praised the move as strategic pressure leading to diplomacy.

Countries including Japan, South Korea, Germany, and Australia welcomed the de-escalation, given their reliance on energy shipments through the Strait.

Pakistan has since invited U.S. and Iranian delegations to further negotiations in Islamabad, though the path toward a long-term agreement remains uncertain as Iran maintains that talks do not signal the end of hostilities.