Global energy markets were sent into a tailspin Friday as oil prices plunged more than 10% following a surprise announcement that the Strait of Hormuz has been reopened to commercial traffic.
The dramatic shift comes amid growing optimism that a lasting peace deal may finally be within reach, with both Washington and Tehran signaling a breakthrough in negotiations just days before the current truce was set to expire.
The impact on trading floors was immediate. Brent crude plummeted to roughly $88.27 per barrel, while U.S. West Texas Intermediate followed suit, cratering to $83.29.
The figures represent a stark reversal for a market that has been gripped by massive price surges since the conflict began in late February.
The market rally was sparked by the news that Iranian Foreign Minister Abbas Araghchi had declared the waterway “completely open” for all commercial vessels for the remainder of the current ceasefire. President Trump welcomed the development on Truth Social, thanking the country while referring to the passage as the “Strait of Iran.”
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“IRAN HAS JUST ANNOUNCED THAT THE STRAIT OF IRAN IS FULLY OPEN AND READY FOR FULL PASSAGE. THANK YOU!” the President posted. However, he quickly clarified that the U.S. will not be lifting its pressure entirely.
In a subsequent post, Trump noted that while the route is open for global business, a naval blockade will remain in “full force and effect” specifically for Iranian vessels until a final “transaction” is 100% complete. He added that the process should move “very quickly” as most terms are already negotiated.
While oil tumbled, the reaction across the stock market was mixed. U.S. futures for the Dow Jones rose 0.7% as investors cheered the potential end of the 50-day conflict, while Germany’s DAX saw a 2.1% boost.
However, Asian markets remained cautious, with Tokyo’s Nikkei 225 falling 1.8% as traders weighed the long-term stability of the region. Despite the dip in crude, the International Energy Agency warned that Europe still faces a tight window, with roughly six weeks of jet fuel supplies remaining.
The diplomatic movement coincides with a 10-day ceasefire in Lebanon. Lebanese President Joseph Aoun characterized the current window as “delicate and crucial,” describing the truce as the necessary gateway for broader negotiations, including the withdrawal of Israeli forces and the resolution of border disputes.
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