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The two-week ceasefire between the United States and Iran triggered the largest single-session oil crash since 2020 — and the Latin America oil price impact is splitting the region into instant winners and sudden losers.

What Happened

Just ninety minutes before his own 8 PM ET deadline on Tuesday, Trump posted on Truth Social that he would suspend bombing Iran for two weeks, contingent on the complete reopening of the Strait of Hormuz. Iran’s Supreme National Security Council accepted within the hour, and Foreign Minister Araghchi confirmed that safe passage would be permitted under Iranian military coordination. Pakistan’s Prime Minister Sharif, who mediated the deal, invited both delegations to Islamabad for Friday, April 10.

The market reaction was immediate and violent. Brent fell from $110 to $93 in a single session — the steepest one-day percentage drop in nearly six years. WTI crashed 18% to approximately $95. S&P 500 futures surged 2.3%, the Nikkei jumped 4.8%, and the Kospi rose 5.6%. Gold climbed 2.5%. The five-week war premium that had driven oil from $61 in January to $118 at the March peak unwound in hours.

The Winners: Net Oil Importers Breathe

For Chile, the ceasefire is the single best piece of economic news since the Hormuz crisis began. President Kast’s government had been spending $140 million per week to suppress fuel prices through the MEPCO stabilization mechanism before invoking an emergency clause that allowed gasoline to rise 32% and diesel 62%. If Brent stabilizes below $95, the fiscal hemorrhage stops and the central bank regains space for the rate cuts the market had priced in before the war. Kast’s approval rating, which dropped six points after the fuel hike, may recover.

Peru benefits heading into Sunday’s presidential election. As a net oil importer, the $15–20 per barrel drop eases inflationary pressure and improves the current account — whoever wins inherits a better macro hand. Central America and the Caribbean, where fuel subsidies are thin and pass-through is fast, get the most direct consumer relief. Bolivia, which imports over 80% of its diesel, was approaching a fiscal breaking point; the crash buys time.

The Losers: Exporters Face Revenue Math

Brazil’s calculus flips. President Lula signed a R$30 billion ($5.8 billion) emergency diesel package funded by a 12% export tax on crude oil, targeting Petrobras windfall profits. At $110 Brent, the tax generated substantial revenue. At $93, the fiscal math changes — either the subsidy costs the treasury more, or Petrobras margins compress, or both. Petrobras shares are expected to fall Wednesday while the broader Ibovespa rallies on disinflation optimism — a mirror image of the war’s beneficiary rotation.

Colombia faces the sharpest reversal. Crude revenues fund roughly 10% of the national budget, and the country was already staring at a fourth credit downgrade before $110 oil temporarily bought fiscal breathing room. At $93, that cushion evaporates — and the May 31 presidential election lands in a tighter fiscal environment. Ecuador, which depends on oil for approximately 30% of export revenue, and Venezuela, whose fragile post-Maduro export recovery just crossed one million barrels per day, both lose revenue at the margin.

Argentina presents a more nuanced picture. Vaca Muerta’s $18 billion RIGI investment pipeline was built on sustained high prices, and a prolonged drop below $90 would stress project economics for the most marginal filings. But Milei’s government had legally banned fuel subsidies, meaning domestic gasoline rose 20–25% through market mechanisms in March. Lower crude means lower pump prices without any policy intervention — a rare political gift for a government preparing for October elections.

Central Banks: The Rate-Cut Calculus Resets

The most consequential downstream effect is monetary policy. Brazil’s Copom meets April 28–29 — one week after the ceasefire expires. If oil settles in the $90–95 range and the ceasefire holds, the entire inflation trajectory that was forcing the BCB toward higher rates reverses. The Focus survey, due this week, will be the first reading of how analysts are repricing expectations. A material drop in inflation forecasts could shift the Copom from a hawkish hold to a neutral stance.

The same logic applies across the region. Chile’s central bank, which held at 4.5% instead of cutting because of oil-driven inflation, may reopen the easing path. Colombia’s BanRep, which hiked 100 basis points to 10.25% in January to combat energy pass-through, could signal a pause. Mexico’s Banxico, navigating the dual pressure of oil revenue dependence and consumer inflation, gets marginally more room to maneuver.

The Fine Print: Why This May Not Last

Iran is not simply reopening the Strait — it is claiming permanent regulatory authority over what the world previously treated as an international waterway. Araghchi’s statement specified “safe passage via coordination with Iran’s Armed Forces,” and Iran’s ten-point proposal includes maintaining control of Hormuz under an agreed framework, an end to all attacks on the resistance axis, and withdrawal of US forces from the region. None of these conditions have been met.

Netanyahu’s office clarified that the ceasefire does not extend to Lebanon, meaning Israeli strikes on Hezbollah continue. Russia and China vetoed a UN Security Council resolution demanding Iran stop attacks on commercial shipping. And the two-week window expires April 21 — the same week as the FOMC meeting that will set the tone for global monetary policy through Q2.

Goldman Sachs had projected Brent above $100 for years, not months. Oxford Economics cautioned that even under a ceasefire scenario, physical oil flows through Hormuz would not normalize before May. The EIA’s Q1 review showed Brent rose from $61 to $118 in the quarter — the largest inflation-adjusted increase since 1988. Unwinding that in two weeks requires a diplomatic breakthrough that has eluded five weeks of war.

For Latin America, the overnight crash is a reprieve, not a resolution. The governments that built emergency budgets around $110 oil — Brazil’s R$30 billion diesel package, Chile’s MEPCO emergency clause, Argentina’s bioethanol blending ceiling — now face a different set of assumptions. The structural question remains the same one the IIF posed during the crisis: the Latin America oil price impact amplifies divergences between countries. At $110, the divergence was about who could afford to subsidize. At $93, it is about who built policy on assumptions that just broke.

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