Oil prices plunge 10% after Iran says Strait of Hormuz is open for commercial vessels
Oil prices fell sharply and US stock indexes hit new all-time highs after Iran’s foreign minister said the Strait of Hormuz was open to commercial ships.
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“In accordance with the ceasefire in Lebanon, the passage of all commercial ships through the Strait of Hormuz is declared completely open for the remaining period of the ceasefire, on the coordinated route already announced by the Ports and Maritime Organization of the Islamic Republic of Iran,” Seyed Abbas Araghchi wrote in a post on X.
U.S. crude oil plunged 12% to nearly $83 a barrel, while international Brent crude also fell more than 11% to around $88 a barrel.
Fuel oil futures, which are a bellwether for jet fuel, fell 13%. Wholesale RBOB gas futures also fell 7%.
It was not immediately clear whether the reference to a “coordinated route” meant the ships would have to pay a toll to Iran, as some have reportedly done in recent weeks. It was also not immediately clear whether ships in the region, which have been threatened and attacked, would trust the announcement.
Shortly after the Iranian minister’s post, President Donald Trump celebrated the news with his own post on Truth Social, which read: “IRAN HAS JUST ANNOUNCED THAT THE STRAIT OF IRAN IS FULLY OPEN AND READY FOR FULL PASSAGE. THANK YOU!”
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However, Trump, in a second message, said that “the naval blockade will remain in full force with respect to Iran, only until our transaction with Iran is 100 percent complete.”
GasBuddy analyst Patrick De Haan wrote on X that changes in oil prices could quickly translate into lower gas prices.
“This could accelerate the decline in fuel prices starting this weekend, with the national average likely falling below $4/gal to perhaps $3.65 to $3.85,” De Haan wrote.
As of Friday morning, the average price per gallon was $4.09, according to AAA, and has fallen by a few cents each day this week.
In early trading, the S&P 500 rose 1% and the Nasdaq Composite jumped 1.3%. As a result, both set new all-time highs.
The Dow jumped more than 800 points and the Russell 2000 index rose 1.7%
US Treasury yields also fell sharply. The yield on 10-year US government bonds fell to 4.23%, its lowest level since March 18.
Stocks across Europe also rebounded following the Iranian minister’s announcement, with the Stoxx 600 index rising 1.2% and flagship indexes in France and Germany jumping more than 2%. Stocks in the UK and Italy were up about 1%.
European leaders, who were holding a summit when Iran’s announcement was made, greeted the news cautiously.
“Under international law, transit through waterways like the Strait of Hormuz must remain open and free,” the EU’s top diplomat, Kaja Kallas, said in a message on X. “Any system of paying for passage will set a dangerous precedent for global shipping routes.”
French President Emmanuel Macron and British Prime Minister Keir Starmer, who led the summit, also welcomed the news. But Macron said securing the strait must be ensured by a neutral and independent party. “The strait should be reopened immediately, without tolls or restrictions,” Starmer added.
