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 can reach global markets. Brent crude dropped more than 10% to $88.8 a barrel, down from a peak of $119 last month but still above pre-war levels of $72.
The announcement came after a 10-day ceasefire between Israel and Lebanon, brokered by Donald Trump. Iran's foreign minister, Abbas Araghchi, stated that vessels would be free to transit the strait during the ceasefire. However, Trump later said the US naval blockade would remain until a deal with Tehran is reached, noting that negotiations should proceed quickly as most points are already agreed.
European gas prices also fell by about 6.4% to €39 per megawatt hour, while stock markets rose across the Atlantic. Germany's Dax and France's Cac gained around 2%, the Dow Jones rose 1.8%, and the FTSE 100 closed up 0.7%.
The strait's closure had disrupted Middle Eastern crude and gas supplies, described by the International Energy Agency as the biggest energy supply crisis in history. About 800 tankers remain stuck in the Gulf, with 300 carrying oil and gas. Before the crisis, over 130 ships transited daily, but this reduced to a trickle under threats from Iran's Revolutionary Guards.
Uncertainty remains over whether the ceasefire will hold and whether shipping companies will risk transit. Araghchi's claim that the route is open was met with scepticism, as Iranian state media called his post 'bad and incomplete' and warned that passage would be void if the US blockade continues. The head of the International Chamber of Shipping urged close coordination for a safe and sustained return to normal transit.
