Global oil prices crashed by more than 10% on Friday after Iran declared the strategic Strait of Hormuz open to commercial shipping, a dramatic shift that followed a fragile ceasefire between Israel and Lebanon and sparked hopes of a broader de-escalation in the region.
The benchmark Brent crude futures plummeted by $11.12, or 11.2%, to $88.27 a barrel, while US West Texas Intermediate crude fell $11.40, or 12%, to $83.29. The sell-off accelerated after Iran’s Foreign Minister, Abbas Araghchi, posted on X that “the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire, on the coordinated route as already announced by Ports and Maritime Organisation of the Islamic Rep. of Iran.”
The announcement was directly tied to a 10-day ceasefire between Israel and Lebanon, which began on 16 April 2026 and was brokered by the United States. That pause in hostilities, which involves the Iran-backed Hezbollah group within Lebanon, created a diplomatic window Iran has now used.
US President Donald Trump swiftly confirmed the development on his Truth Social platform, writing: “Iran has just announced that the Strait of Iran is fully open and ready for full passage! Thank you!” He later added that Iran had agreed “to never close the Strait of Hormuz again” and claimed it “will no longer be used as a weapon against the World!”
The Critical Chokepoint
The significance of Iran’s statement cannot be overstated, given the Strait of Hormuz’s role as the world’s most important oil transit corridor. The narrow waterway is a lifeline for global energy supplies, with its potential closure representing a perpetual threat that has spiked prices and rattled markets for decades.
According to analysis, a full closure could remove around 20 million barrels per day from the global market—roughly 20% of world petroleum consumption. The recent blockade, which began on 28 February 2026 following US-Israeli airstrikes on Iran, had already caused what the International Energy Agency called the “largest supply disruption in the history of the global oil market,” shuttering some 13 million barrels per day of supply and forcing Persian Gulf producers to slash output.
Iran had effectively blocked the strait to most commercial shipping since February, causing tanker traffic to fall by about 70% and leaving over 150 ships anchored outside. The Foreign Minister’s latest announcement represents a stark reversal from his position in March, when he asserted Iran’s full authority over the strait and warned it was closed to its “enemies,” specifically vessels linked to the US and Israel.
Conditions and Verification
However, the reopening comes with clear conditions. The reference to a “coordinated route” indicates passage is not entirely unrestricted and must follow Iranian directives. Senior Iranian officials have stated military vessels are not permitted, and commercial ships require authorisation from Iranian forces.
The International Maritime Organization (IMO) is currently verifying Iran’s announcement to ensure it complies with principles of freedom of navigation. Furthermore, it remains unclear whether Iran will charge tolls for passage—a practice it has employed before, which is considered contrary to international maritime law. Iran, with US assistance, is also reportedly removing sea mines from the waterway.
Critically, the US naval blockade on vessels to and from Iranian ports remains in effect. President Trump stated this blockade “will remain in full force and effect as it pertains to Iran, only, until such time as our transaction with Iran is 100% complete.”
Broader Negotiations and Market Outlook
The strait’s status is a pivotal element in wider US-Iran negotiations to end the conflict. President Trump expressed optimism on Thursday, telling reporters, “I think we’re very close to making a deal with Iran.” He also claimed Tehran had offered not to possess nuclear weapons for more than 20 years and to hand over its enriched uranium stockpile, though Iran has not confirmed these claims. Previous reports indicated the US sought a 20-year freeze on enrichment, while Iran countered with five years.
Market analysts cautioned that the price plunge reflects hope rather than confirmed physical flows. Giovanni Staunovo, an analyst at UBS, stated, “Comments from Iran’s foreign minister indicate a de-escalation as long as the ceasefire is in place, now we need to see also if the number of tankers crossing the Strait increases substantially.” He had previously noted that the path of least resistance for oil prices was higher as long as the strait remained shut.
Even with the reopening, supply tightness, particularly in Europe, is expected to persist for weeks due to the approximate 21-day voyage time from the Gulf to Rotterdam.
In other related developments, President Trump claimed China was “very happy” about the strait reopening and asserted Beijing had agreed not to supply weapons to Iran—a claim contradicted by some reports. He also dismissed NATO as “useless” after the alliance offered assistance following the announcement. The wider conflict’s impact is also noted beyond energy, with potential disruptions to the infrastructure and materials crucial for the development of artificial intelligence.
