Oil Prices Fall 13% After Strait of Hormuz Reopens

Oil prices dropped about 13% on Friday after Iran’s foreign minister said all commercial vessels could pass through the Strait of Hormuz during a ceasefire period, while US President Donald Trump claimed Iran has agreed never to close the strategic waterway again.

Brent crude futures fell $12.87, or 12.95%, to $86.52 per barrel by mid-morning in New York, after touching an intraday low of $86.09. US West Texas Intermediate crude slid $13.50, or 14.26%, to $81.19, after hitting $80.56. Both benchmarks reached their lowest levels since 10 March and recorded their sharpest daily declines since early April.

Iranian Foreign Minister Abbas Araghchi said the Strait of Hormuz was open following a ceasefire agreement linked to Lebanon. However, it remained unclear whether he referred to the latest 10-day truce between Israel and Lebanon or an earlier temporary arrangement involving Iran and the United States.

Market analysts said the announcement signalled a possible easing of tensions, even as uncertainty remained over the durability of the ceasefire and US sanctions enforcement.

“This news is having an immediate impact on markets,” said one analyst, noting that expectations of reduced disruption supported the sharp price drop. Others cautioned that the situation remained fluid and dependent on whether tanker traffic through the strait increases in the coming days.

Global stock markets reacted positively. Wall Street’s main indices opened higher, extending recent record gains in the S&P 500 and Nasdaq. European equities also rose, with major indices in Frankfurt and Paris up around 2%.

In Asia, markets were mostly weaker, with Tokyo falling after hitting a record high in the previous session. Taiwan’s benchmark also slipped after reaching a record valuation earlier in the week.

The easing of oil prices came as investors weighed hopes of broader diplomatic progress. European leaders, including France and the United Kingdom, discussed the possibility of a multinational force to secure shipping routes once the conflict ends.

US President Donald Trump said negotiations with Iran were progressing and suggested a deal could be close, including assurances over Iran’s nuclear programme. He also said Washington had blocked Israel from further strikes in Lebanon.

Despite the announcement on the Strait of Hormuz, uncertainty remains over enforcement of US sanctions and the durability of the ceasefire, with analysts warning that maritime flows could still face disruption if talks collapse.