Oil Prices Tumble as Iran Reopens Strait of Hormuz During Ceasefire

Global oil prices dropped sharply after Iran announced that the Strait of Hormuz would be “completely open” to commercial vessels for the remainder of the ceasefire.

The price of Brent crude fell to around $88 per barrel, down from above $98 earlier in the day, reflecting a rapid easing of supply concerns that had gripped global markets for weeks.

Iranian Foreign Minister Abbas Araghchi confirmed the development, stating that all commercial shipping would be allowed to pass freely through the strategic waterway during the ceasefire period.

The Strait of Hormuz, a narrow channel connecting the Gulf to the Arabian Sea, is one of the world’s most critical energy corridors, typically handling about one-fifth of global oil and liquefied natural gas shipments.

Markets reacted swiftly to the announcement. Major U.S. stock indices rallied in early trading, with the S&P 500 rising by 0.8%, while the Nasdaq Composite and the Dow Jones Industrial Average each gained more than 1%.

European markets also posted strong gains, with France’s CAC 40 and Germany’s DAX both climbing over 2%, while the UK’s FTSE 100 rose by around 0.5%.

The reopening follows weeks of disruption after the Strait was effectively closed amid escalating conflict involving Iran, the United States, and Israel. The shutdown had significantly reduced global oil and gas supplies, pushing prices above $100 per barrel and peaking at over $119 in March.

Before the conflict began, Brent crude had been trading below $70 per barrel, underscoring the scale of the price surge triggered by the الأزمة.

The spike in energy prices had ripple effects across the global economy, driving up petrol and diesel costs, increasing pressure on airlines due to rising jet fuel prices, and raising concerns over food inflation. The Strait is also a key route for fertiliser exports, with roughly a third of critical fertiliser chemicals passing through it.

However, there are early signs of relief. In the UK, fuel prices have begun to ease slightly, marking the first decline since the conflict began, though costs remain significantly higher than pre-war levels.