Uncertainty over Washington's next moves cloud trading behaviour: File Image/Pixabay

As expected, the ceasefire between the U.S. and Iran reached in the previous session caused more losses for oil on Wednesday – but given that it took Iran less than a day to breach conditions of the ceasefire, analysts braced for more trading volatility in the days ahead.

West Texas Intermediate plummeted over 16 percent to close at $94.41 per barrel, its biggest daily drop since April 2020 at the height of the Covid lockdowns.

Brent for June delivery shed 13 percent to settle at $94.75.

No sooner did the session close than Iranian state news agency Fars said oil tanker traffic through the Strait of Hormuz – which Iran had started to reopen as a condition of the ceasefire - has ceased following an Israeli attack on Lebanon.

Additionally, Saudi Arabia’s critical East-West Pipeline, an artery that bypasses the Hormuz, was reportedly hit by an Iranian drone, as were other facilities in the kingdom; flows through the pipeline were expected to be affected as damage was being assessed.

In response, U.S. vice president J.D. Vance warned the Iranian regime that, "if they break their end of the bargain, they're going to see some serious consequences."

Meanwhile, Kyriakos Mitsotakis, prime minister of Greece, warned that Iran’s continued proposal to charge ships for safe passage through Hormuz was “completely unacceptable.

“I don’t think that the international community would be ready to accept Iran setting up a toll booth for every ship that crosses the strait……This was not the case before the war started and it cannot be the case after the war finishes; we would be setting a very, very dangerous precedent, if that were to happen, for the freedom of navigation.”

For its part, while The New York Times acknowledged that the overall signal of de-escalation between Iran and the U.S. via the ceasefire was welcomed by the investment community, but “there remained a sense of unease over the lack of detail around the cease-fire agreement and the sheer unpredictability over what the administration will do next.”