Oil futures experienced a sharp decline Tuesday evening in New York, with West Texas Intermediate (WTI) falling more than $10 a barrel to trade below the $100 mark. The significant drop followed an announcement by President Trump on social media, indicating a two-week cease-fire agreement with Iran aimed at reopening the Strait of Hormuz.

The May delivery WTI futures had concluded the regular trading session earlier Tuesday at $112.95 a barrel, posting a modest 0.5% gain for the day. This price represented a substantial increase of approximately 69% since the end of February and pushed the benchmark domestic oil price to its highest level in nearly four years. However, the subsequent evening trading session saw prices plummeting, putting WTI on track for one of its most substantial daily declines on record.

The Strait of Hormuz is a crucial maritime chokepoint through which an estimated 20% of the world's oil supply flows. The prospect of its reopening, coupled with an agreement between the U.S. and Iran, typically suggests an easing of supply concerns in global markets, which can exert downward pressure on oil prices.

Prior to the evening's announcement, Tuesday's regular trading session was characterized by relatively subdued market activity. Traders and investors had been cautiously anticipating various outcomes, ranging from a potential de-escalation by the U.S. administration, which had recently intensified its rhetoric, to a further escalation of military actions. The market's muted response in the regular session was noted as the second smallest daily movement since the U.S. and Israel commenced bombing operations in Iran.

President Trump stated in his social media post that Iran had agreed to permit safe passage through the strait. He added, "We received a 10-point proposal from Iran, and believe it is a workable basis on which to negotiate. A two week period will allow the Agreement to be finalized and consummated." The proposed two-week cease-fire period is intended to facilitate the finalization of this agreement.