Oil and gas prices fell sharply on Friday after Iran announced the reopening of the Strait of Hormuz to commercial shipping, raising hopes that stranded tankers could soon deliver millions of barrels of oil and gas to global markets. Brent crude dropped more than 10% to $88.8 a barrel, well below last month's peak of $119 but still above the pre-war price of $72.
The European benchmark gas contract fell by about 6.4% to €39 per megawatt hour, while stock markets rose on both sides of the Atlantic. The FTSE 100 closed up 0.7%, Germany’s Dax and France’s Cac gained around 2%, and the Dow Jones and S&P 500 rose 1.8% and 1.2% respectively.
Iranian Foreign Minister Abbas Araghchi said the strait would be open for the duration of the 10-day ceasefire between Israel and Lebanon, struck on Thursday. However, US President Donald Trump stated that the US naval blockade on Iran’s use of the strait would remain in full force until a deal is reached with Tehran, adding that the process “should go very quickly.”
The reopening follows seven weeks of disruption that the International Energy Agency described as the biggest energy supply crisis in history. Before the crisis, more than 130 ships a day transited the strait, but this had fallen to a trickle under threats from Iran’s Revolutionary Guards, leaving about 800 tankers—including 300 oil and gas vessels—stranded in the Gulf.
Despite the announcement, uncertainty remains. Araghchi’s statement noted that tankers must follow a designated route nicknamed the “Tehran tollbooth,” where recent vessels paid $2m for safe passage. Other Iranian state media called the post “bad and incomplete,” suggesting passage would be void if the US blockade continues. Thomas A Kazakos, head of the International Chamber of Shipping, called for close coordination to ensure a safe and orderly return to normal transit.
