Brent crude fell below $90 a barrel after Iran declared the strategic waterway completely open for commercial traffic during the Israel-Lebanon ceasefire.
10:20 AM
Oil prices fell sharply on Friday after Iran's Foreign Minister Abbas Araghchi announced that the Strait of Hormuz would be "completely open" to commercial vessels for the duration of the ceasefire between Israel and Lebanon.
Brent crude for June delivery dropped 9.1% to $90.38 a barrel, while U.S. crude for May delivery fell 9.8% to $85.37. The WTI benchmark declined approximately 11.7%, reaching $83.60, and the European Brent reference fell below $90 to $88.91 a barrel. Natural gas prices also declined, with the TTF contract in the Netherlands falling 8.7% to 38.71 euros per megawatt hour.
"In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire," Araghchi said in a post on X on Friday. He added that vessel passage would follow a coordinated route already announced by Iran's Ports and Maritime Organisation.
The Strait of Hormuz is a narrow waterway linking the Persian Gulf to the Arabian Sea, through which approximately one-fifth of the world's oil and liquified natural gas typically transits. The announcement came after a 10-day ceasefire was agreed between Israel and Lebanon late Thursday.
Global financial markets rallied on the news. The Dow Jones Industrial Average jumped nearly 600 points, or 1.23%, to 49,176.61. The S&P 500 rose 0.76% to 7,094.78, and the Nasdaq gained 1.03% to 24,351.09. The VIX, a measure of market volatility, slipped 1.56%, signaling easing anxiety among traders. European indices also climbed, with the CAC index in Paris and the DAX in Frankfurt both rising more than 2%.
U.S. President Donald Trump confirmed the development in a social media post, stating that the strait was "completely open and ready for business and full passage."
Analysts noted that despite the opening, as much as 13 million barrels per day of supply remains impacted, keeping underlying market conditions tight. The announcement appeared to ease concerns about disruptions to global energy supplies that had accumulated during the period of heightened regional tensions.
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