Oil slides as Hormuz reopens

Oil prices fell sharply on Friday after Iran’s foreign minister said the Strait of Hormuz would remain open to commercial shipping during a ceasefire, easing immediate fears of a prolonged choke on one of the world’s most important energy routes. Brent crude and US West Texas Intermediate both tumbled by more than 11% at one stage of trading, as investors unwound risk premiums that had built up during weeks of conflict and supply disruption.

The market reaction followed a statement from Iran’s foreign minister, Abbas Araqchi, who said commercial vessels could continue to pass through the strait under a coordinated route set by Iran’s Ports and Maritime Organisation. The announcement came as a 10-day ceasefire held in Lebanon and diplomacy around the broader regional conflict appeared to gain momentum. The Strait of Hormuz handles a significant share of the world’s seaborne oil trade, so any sign that traffic can resume tends to trigger an immediate repricing across crude, shipping and equities.

Brent fell below $90 a barrel and touched its lowest level since 10 March, while US crude also dropped steeply as traders judged that the worst-case scenario of a prolonged closure had, for the moment, receded. The sell-off rippled across wider markets. Airline shares rose on hopes of lower fuel costs, while oil majors and broader energy stocks came under pressure as the prospect of a supply shock eased. Global equities advanced and bond yields slipped as investors shifted away from safe-haven positioning built during the Gulf crisis.

Yet the easing in prices did not amount to a full return to normality. Shipping companies and maritime bodies moved cautiously, seeking clarity on how Iran’s announcement would work in practice and whether navigation would be genuinely free and secure. Several operators indicated they needed more detail on approved lanes, mine-clearing efforts and the legal standing of Iran’s transit conditions before fully resuming voyages through the waterway. The International Maritime Organization was reported to be examining the implications, while industry participants waited for firmer operational guidance.

That caution reflects the fine print behind the headline declaration. A senior Iranian official said ships crossing Hormuz would need to coordinate with the Islamic Revolutionary Guard Corps and use routes judged safe by Tehran, while military vessels would not be allowed through. At the same time, the United States has kept in place a blockade on Iranian ships and ports, even as President Donald Trump said Tehran had agreed not to close the strait again. Those overlapping restrictions mean that while the immediate threat to commercial flows has eased, the corridor remains subject to political bargaining, military calculation and practical uncertainty.

The broader backdrop is a war that has already inflicted deep damage on energy production and transport across the region. Reuters reported that more than $50 billion worth of crude oil has gone unproduced during roughly 50 days of conflict, with outages affecting producers and infrastructure far beyond the strait itself. Analysts have warned that even if tankers begin moving more freely, supply chains will not snap back overnight. Inventories have been drawn down, repair work in some oilfields may take months, and damage to refining and gas infrastructure could take far longer to reverse.

That helps explain why the market’s retreat, while dramatic, did not erase all of the war premium in oil. Prices remained above levels seen before the conflict intensified, and traders continued to assess whether the ceasefire and diplomatic contacts can produce something more durable. Reuters reported that back-channel discussions between Washington and Tehran had made progress, though major issues remained unresolved, including the future of Iran’s nuclear programme, sanctions relief and the status of maritime controls. A breakdown in those talks could quickly restore fears over Hormuz and send energy prices higher again.

European leaders also moved to frame the reopening as only a first step rather than a settled outcome. France and Britain welcomed the restoration of commercial passage but pushed for more permanent safeguards for navigation security in the strait, including the possibility of a wider maritime initiative. That response underscores how governments and traders alike are treating Friday’s announcement less as a resolution than as a temporary opening in a still-fragile theatre.