Oil and gas prices fell sharply on Friday after Iran said the Strait of Hormuz was open to commercial shipping, potentially allowing tankers holding millions of barrels of oil and gas to reach global markets. Iran's foreign minister announced that vessels would be free to transit the strait for the duration of the 10-day ceasefire between Israel and Lebanon, which was struck on Thursday.
Brent crude, the international benchmark, fell more than 10% to $88.8 a barrel, well below a peak of $119 last month but still higher than the $72 before the war. The benchmark European gas contract fell by about 6.4% to about €39 (£34) per megawatt hour, amid hopes that diplomatic progress between the US and Iran could end the conflict.
Stock markets rose on both sides of the Atlantic. Germany's Dax and France's Cac gained about 2%, while the Dow Jones and S&P 500 rose 1.8% and 1.2% respectively. In London, the FTSE 100 closed up 0.7%.
Tehran's chokehold on the Strait of Hormuz since US and Israeli attacks on Iran began seven weeks ago had disrupted supplies of Middle Eastern crude and gas, as well as refined fuels from Gulf refineries, in what the International Energy Agency described as the biggest energy supply crisis in history.
However, big questions remain over whether the ceasefire will hold long enough for tankers stranded in the Gulf to move through the strait, and whether shipping companies will be willing to risk transit. About 800 tankers remain stuck in the Gulf, of which around 300 are oil and gas tankers.
Iran's foreign minister said the strait was "completely open" but tankers must follow the same route through the narrow waterway nicknamed the "Tehran tollbooth", where vessels have been required to pay Iran about $2m (£1.5m) for safe passage. The head of the International Chamber of Shipping cautioned that there was still much uncertainty about what the announcement means in practice.
