Oil prices plunge as Iran reopens Strait of Hormuz amid ceasefire, easing supply fears

WASHINGTON, DC: Oil prices fell sharply on Friday, April 17, after Iran announced the Strait of Hormuz would remain fully open to commercial shipping during the current ceasefire, easing fears of a prolonged supply crunch.

US crude reportedly slipped below $83 a barrel after crossing $105 earlier this week.

Global stock markets also advanced as investors viewed the move as a sign that tensions may be cooling and trade flows could stabilize soon.

Markets react as supply fears ease

The Strait of Hormuz is one of the world’s most strategically important maritime routes, carrying a major portion of global oil exports.

Any threat to vessel movement through the narrow waterway typically triggers immediate volatility in energy markets because disruptions can reduce supply and raise fuel costs across the world.

That pressure began to unwind after Iranian Foreign Minister Abbas Araghchi said, “The passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire.”

The statement was interpreted as a major de-escalation signal.

Traders quickly reduced the geopolitical risk premium that had been built into crude prices during weeks of military confrontation.

West Texas Intermediate crude, the US benchmark, reportedly dropped around 9% to $82.93 a barrel after touching $105.63 earlier in the week. 

Brent crude, the global benchmark, also moved sharply lower, falling into the high-$80s to low-$90s range after earlier trading near $98.

The Strait of Hormuz had been effectively shut by Iran after the US and Israel launched military strikes in late February, disrupting tanker traffic and sharply tightening global energy supplies.

Before the conflict, Brent crude had traded below $70 a barrel.

It later surged above $100 and peaked beyond $119 in March as fears of a wider regional war intensified. 

Trump hails opening of Strait of Hormuz

President Donald Trump celebrated on social media after Iran announced the Strait of Hormuz would remain open during a ceasefire. 

Posting on Truth Social, Trump wrote, “IRAN HAS JUST ANNOUNCED THAT THE STRAIT OF IRAN IS FULLY OPEN AND READY FOR FULL PASSAGE. THANK YOU!”

Minutes later, he doubled down with another post, adding, “OUR NAVAL BLOCKADE WILL REMAIN IN FULL FORCE,” signaling continued US military presence in the region despite the easing of tensions.

On April 16, Thursday, President Donald Trump had said that the Iran conflict “should be ending pretty soon,” while indicating another round of talks between Washington and Tehran could happen “probably, maybe, next weekend.”

Earlier in the day, Trump also told reporters, “It’s looking very good that we’re going to make a deal with Iran, and it’s going to be a good deal.”

Markets appeared to take Trump’s comments, combined with Iran’s shipping announcement, as signs that both sides may be seeking a pathway away from confrontation.