Oil markets saw sharp declines on Friday after Iran announced that the Strait of Hormuz would remain “completely open” to commercial shipping for the duration of the ceasefire in the ongoing US-Israel conflict with Tehran.
Brent crude fell to $88 (£65) a barrel following the statement, down from above $98 earlier in the day, BBC reports.
The narrow waterway south of Iran is one of the world’s most critical energy chokepoints, carrying around 20 percent of global oil and liquefied natural gas supplies.
US President Donald Trump welcomed Iran’s declaration, though maritime authorities stressed that verification was still underway. Iranian Foreign Minister Abbas Araghchi said, “The passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire.”
Global equity markets rallied on the news. The S&P 500 closed up 1.2 percent, while Paris’s Cac and Frankfurt’s Dax each gained around 2 percent. London’s FTSE 100 ended 0.7 percent higher.
The Strait had been effectively shut since late February, when Iran blocked tanker traffic in response to US and Israeli military strikes.
The disruption sent oil prices soaring, with Brent crude climbing from under $70 before the conflict to more than $119 in March. Prices eased after Friday’s announcement but later rebounded to $92.
Despite Iran’s assurances, shipping groups remain cautious. BIMCO, the international shipping association, warned operators of unresolved mine threats in the traffic separation scheme. Jakob Larsen, BIMCO’s safety chief, said, “The Traffic Separation Scheme is not declared safe for transit at this point.”
The International Maritime Organization (IMO) also signaled concern. Secretary General Arsenio Dominguez said his office was verifying Iran’s pledge to ensure compliance with freedom of navigation and secure passage under IMO rules.
The closure of the Strait has had far-reaching consequences beyond energy markets. Rising oil prices pushed up petrol and diesel costs worldwide, strained jet fuel supplies, and raised fears of grounded flights.
Fertiliser shipments were also disrupted, driving up agricultural input costs and sparking concerns over food inflation. A third of global fertiliser chemicals typically pass through the Strait.
In the UK, motoring group RAC reported that pump prices had begun to ease slightly on Thursday and Friday, marking the first decline since the outbreak of war.
Iran’s announcement followed a ceasefire agreement between Israel and Lebanon. Trump hailed the move on Truth Social, writing: “IRAN HAS JUST ANNOUNCED THAT THE STRAIT OF IRAN IS FULLY OPEN AND READY FOR FULL PASSAGE. THANK YOU!” He added that Iran had agreed “to never close the Strait of Hormuz again.”
However, Trump later clarified that a naval blockade of Iran would remain in place until a permanent settlement to end the war is reached.
