Crude Oil Plunges Below $90 After Iran Reopens Strait of Hormuz Amid Ceasefire

Key Highlights

• Iranian officials announced the complete reopening of the Strait of Hormuz to commercial traffic during the ceasefire period
• Brent crude tumbled more than 10% to approximately $88.65 per barrel; WTI declined to under $82
• Israel and Lebanon initiated a 10-day ceasefire beginning Thursday at 5 p.m. Eastern Time
• Reports indicate the U.S. may release $20 billion in frozen Iranian assets in exchange for enriched uranium
• President Trump verified that U.S. naval forces will continue blockading Iran even as the strait reopens

Crude oil markets experienced a dramatic selloff Friday following an announcement from Iranian Foreign Minister Abbas Araghchi that the Strait of Hormuz would be completely accessible to commercial shipping throughout the duration of the current ceasefire agreement between Israel and Lebanon.

Brent crude plummeted over 10% to approximately $88.65 per barrel. West Texas Intermediate experienced a comparable decline, falling below $82. Both oil benchmarks had been trading north of $100 at the week’s outset.

Minister Araghchi shared the announcement via X, stating that transit was “completely open for all commercial vessels” following a predetermined route established by Iranian officials.

President Trump subsequently issued his own statement on Truth Social, acknowledging the strait’s reopening. However, he emphasized that the U.S. naval blockade surrounding Iran “will remain in full force and effect” pending the completion of negotiations with Tehran.

This statement introduced some ambiguity for maritime operators. Iranian state television indicated that vessels traversing the strait must coordinate directly with Iran’s Revolutionary Guard Corps. Questions remained regarding the specific maritime corridor ships would be obligated to follow.

Implications of the Ceasefire for Diplomatic Progress

Thursday saw Trump reveal that Israel and Lebanon had reached consensus on a 10-day cessation of hostilities commencing at 5 p.m. Eastern Time. The president stated he had conducted discussions with Lebanese President Joseph Aoun and Israeli Prime Minister Benjamin Netanyahu to secure the arrangement.

Israel had maintained military campaigns in Lebanon targeting Hezbollah throughout U.S.-Iran ceasefire discussions, which had represented a major impediment to comprehensive negotiations between Washington and Tehran.

The Lebanese ceasefire eliminated one barrier, though a comprehensive agreement between the United States and Iran remains unfinalized.

Potential Agreement Framework Emerges

Axios disclosed Friday that American and Iranian officials are reviewing a three-page framework aimed at resolving the conflict. One component reportedly involves the United States unfreezing $20 billion in Iranian assets in return for Iran surrendering its stockpile of enriched uranium.

Trump informed journalists the parties were “very close” to finalizing an agreement. He indicated Iran had committed to abstaining from nuclear weapon possession for over 20 years and had offered concessions regarding its uranium enrichment activities.

Tehran has demanded the elimination of international sanctions as a condition of any settlement.

Oil prices had been retreating from a peak of approximately $120 per barrel, reached following the outbreak of hostilities with U.S. and Israeli air operations against Iran in late February. Prior to the conflict, crude was exchanging hands around $70 per barrel.

The Strait of Hormuz facilitates approximately one-fifth of global oil transportation. Analysts from ING calculated that roughly 13 million barrels daily were interrupted by its effective closure.

France and Britain were scheduled to convene a Friday meeting with approximately 40 nations to address strategies for reopening the strait. Pakistan’s foreign minister confirmed Thursday that no date has been established for subsequent U.S.-Iran negotiations. European and Gulf state officials privately anticipate a comprehensive deal could require up to six months to finalize.