By Elsie Kamsiyochi
Global oil prices dropped sharply on Friday after Iran announced that commercial shipping through the Strait of Hormuz would remain open, easing fears of a prolonged disruption to one of the world’s most critical energy routes.
The move triggered a dramatic selloff in crude markets, with investors rapidly unwinding positions that had been built on concerns of a wider regional conflict.
Brent crude futures fell nearly 13%, sliding by $12.87 to $86.52 a barrel, while U.S. West Texas Intermediate crude dropped more than 14%, falling $13.50 to $81.19 a barrel. Both benchmarks touched their lowest levels in more than a month and were on course for their steepest single-day declines since early April.
The market reaction followed comments from Iran’s foreign minister, who confirmed that all commercial vessels were once again being allowed safe passage through the Strait of Hormuz during the current ceasefire period. The narrow waterway is one of the world’s most strategically important oil chokepoints, carrying a significant portion of global crude exports. Any threat to shipping there can send energy markets into turmoil within hours.
U.S. President Donald Trump reinforced the shift in sentiment by stating that Iran had agreed not to close the strait again, reducing immediate concerns over supply shortages. His remarks added to hopes that tensions in the Middle East may be beginning to ease after weeks of military escalation and uncertainty.
Investors were also encouraged by reports that Washington and Tehran had made progress in negotiations aimed at ending the conflict. According to emerging reports, both sides are discussing the framework of a possible agreement that could reduce military pressure in the region and potentially stabilise energy exports.
Analysts said the reopening of the strait removed one of the biggest risk premiums that had recently pushed oil prices higher. Traders had feared that a blockade or military confrontation in the Gulf could severely disrupt shipments from major producers, causing a sudden squeeze in global supply.
However, some market experts warned that uncertainty has not fully disappeared. A U.S. military blockade around Iran remains in place, and shipping companies are still proceeding cautiously while waiting for further clarity on security conditions in the Gulf. Even with the waterway open, it could take several weeks before normal cargo flows are fully restored to European and Asian markets.
Energy analysts noted that while the immediate panic has eased, prices could remain volatile if negotiations break down or if tensions flare again. Much will depend on whether diplomatic talks continue to progress and whether both sides can maintain the fragile ceasefire now in place.
For now, the reopening of the Strait of Hormuz has provided the oil market with a rare moment of relief, sending prices sharply lower and offering hope that a broader supply crisis may be avoided.
Source Reuters
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