Oil prices plunge on claims Strait of Hormuz is open
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Oil prices dropped over 10% Friday after President Trump and Iran's foreign minister claimed the Strait of Hormuz — the world's most critical energy shipping lane — is open for transit.
Why it matters: The steep selloff signals traders see a real sign that the unprecedented throttling of oil and petroleum product flows could significantly ease.
- The drop also follows signs of continued progress in ceasefire negotiations.
Driving the news: "In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire," Iranian foreign minister Abbas Araghchi posted on X.
- He said this would occur "on the coordinated route as already announced by Ports and Maritime Organisation of the Islamic Rep. of Iran."
- "IRAN HAS JUST ANNOUNCED THAT THE STRAIT OF IRAN IS FULLY OPEN AND READY FOR FULL PASSAGE. THANK YOU!," Trump posted on Truth Social.
The big picture: The global benchmark Brent crude is down to $88.90 per barrel, the lowest in over a month.
- WTI, the main U.S. reference, is at $83.35.
- U.S. stock futures — already in positive territory before the announcement — moved higher on the news.
Reality check: It's unclear how many shippers will feel the impact of Iran's claims — which lack specifics — and if they provide enough confidence for ships to resume transit through the narrow waterway, which handles about a fourth of the world's seaborne oil trade.
- Oil market and geopolitical analysts quickly expressed skepticism or uncertainty about what the announcements will or won't enable.
- "Shipping logistics through the Strait of Hormuz are complicated even in peacetime," Joseph Webster, a senior fellow with the Atlantic Council, told Axios via email.
- Webster also noted that shippers will be reluctant to pay tolls Iran may impose, especially when the conflict could resume at any time.
Editor's note: This story has been updated with additional context.
