Oil Prices Plummet as Iran Announces Strait of Hormuz Open During Ceasefire

Global oil prices dropped sharply following Iran’s declaration that the Strait of Hormuz would remain “completely open” to commercial ships for the duration of the current ceasefire. The cost of a barrel of Brent crude fell to $88, down from $98 earlier that day. This key waterway, which connects the Gulf of Persia to the Arabian Sea, serves as a vital route for transporting roughly 20% of the world’s oil and liquified natural gas.

Market Reactions to the Announcement

Financial markets responded positively to Iran’s statement, with major US stock indices seeing gains in early trading. The S&P 500 climbed by 0.8%, while the Nasdaq and Dow Jones Industrial Average (DJIA) both increased by over 1%. European shares also rebounded, with the CAC in Paris and DAX in Frankfurt rising more than 2%, and London’s FTSE 100 gaining approximately 0.5%.

“The passage for all commercial vessels through the Strait of Hormuz is declared completely open for the remaining period of ceasefire,” stated Iranian Foreign Minister Abbas Araghchi.

Context of the Closure

The Strait of Hormuz had been effectively blocked by Iran since late February, when the US and Israel launched strikes against the country. This disruption halted tanker traffic, sharply cutting oil and gas supplies and driving prices to historic highs. Prior to the conflict, Brent crude was trading below $70 per barrel, but it surged above $100 and peaked at over $119 in March.

Broader Economic Impacts

Beyond oil, the closure of the strait disrupted fertilizer supply chains, as a third of global key chemical inputs for fertilizers pass through the region. Prices for these essential agricultural goods have risen significantly, raising concerns about potential food inflation. The crisis also caused spikes in petrol and diesel costs for consumers and fueled fears of airline disruptions due to reduced jet fuel availability.

Trump’s Comments on the Ceasefire

US President Donald Trump praised Iran’s decision, tweeting: “IRAN HAS JUST ANNOUNCED THAT THE STRAIT OF IRAN IS FULLY OPEN AND READY FOR FULL PASSAGE. THANK YOU!” However, he later emphasized that a naval blockade of Iran would stay in effect until a lasting agreement to end the US-Israel conflict is reached.