Oil prices fell sharply after Iran announced that the Strait of Hormuz would remain fully open to commercial shipping throughout the ceasefire period.
Brent crude dropped to around $88 per barrel, down from above $98 earlier in the day. The strategic waterway, linking the Gulf to the Arabian Sea, handles roughly 20% of global oil and liquefied natural gas flows, making it a critical artery for global energy supply.
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Iran’s Foreign Minister, Abbas Araghchi, confirmed that all commercial vessels would have unrestricted passage during the ceasefire. The move followed weeks of disruption after the strait was effectively closed amid military escalation involving the US and Israel.
Markets responded quickly. In the US, the S&P 500 rose 0.8%, while the Nasdaq Composite and Dow Jones Industrial Average each gained over 1%. European markets also rallied, with major indices in Paris and Frankfurt climbing more than 2%.
Before the conflict, oil traded below $70 per barrel. Prices surged past $100 and peaked above $119 in March as supply fears intensified due to the strait’s closure.
The disruption had broader economic effects. Fuel prices climbed globally, increasing costs for motorists and airlines, while supply constraints on fertilizers, around a third of which pass through the strait, raised concerns about rising food prices.
Although Iran’s announcement signals easing tensions, shipping companies remain cautious. Some operators say they are not yet ready to resume transit until security risks are clearly reduced.
US President Donald Trump welcomed the reopening but indicated that naval pressure on Iran would continue until a permanent resolution to the conflict is reached.
Overall, while the reopening has brought immediate relief to oil markets, uncertainty remains over how quickly normal shipping activity will resume.
