Oil tumbled the most in weeks on Friday afternoon after Iran declared the Strait of Hormuz “completely open” to commercial shipping, easing fears of a prolonged supply shock that had driven prices toward triple digits.
Brent, the benchmark of Nigeria’s crude oil, slid more than 10 percent on Friday by 3:46pm Nigerian time, falling to around $86 a barrel, its lowest level in over a month, after the announcement by Iranian Foreign Minister Abbas Araghchi during a temporary Middle East ceasefire.
The move marks a sharp reversal for energy markets that had been gripped by volatility since Iran effectively restricted traffic through the narrow waterway, through which roughly a fifth of global oil supply flows, earlier in the conflict.
In a statement shared through X on Friday afternoon, Abbas Araghchi, the Minister for Foreign Affairs of Iran, announced that the Strait of Hormuz is “completely open” in line with the ceasefire in Lebanon.
Global equity and energy markets immediately reacted to the news.
“The market is now pricing that the war and the closure of the Strait is over,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management. “That said we notice that it is only for vessels going along the Iranian coast line. So maybe not a full opening.
Donald Trump, the United States president, also welcomed the announcement while reiterating that the US naval blockade of Iranian ports “will remain in full force and effect” until negotiations with Iran are complete.
Trump also added that “most of the points are already negotiated” with Iran for a longer lasting agreement and that “the process should go very quickly”.
However, none of the details of a potential deal have yet been publicly shared.
Both the S&P 500 and the Nasdaq are at new all time highs, up more than 1% in the first hour of trading, as the positive news for the global economy begin being digested by the markets.
The Dow Jones Industrial Average has risen even more, by over 1.7%, as it was lagging behind the other indices this week.