Iran reopens Strait of Hormuz during ceasefire, oil prices plunge

Iran said it has reopened the Strait of Hormuz to commercial shipping during a 10-day ceasefire between Israel and Hezbollah in Lebanon, easing a key bottleneck for global oil flows.

Iranian Foreign Minister Abbas Araghchi said the strategic waterway is now “completely open,” marking the first significant shift in transit conditions since the strait was effectively shut following the escalation of conflict in late February.

The announcement immediately impacted markets, with oil prices dropping more than 9% to around $90/bbl as traders responded to the prospect of restored supply flows through one of the world’s most critical energy chokepoints.

The Strait of Hormuz typically handles roughly one-fifth of global oil and LNG shipments. Its closure in recent weeks has removed substantial volumes from the market, contributing to elevated prices and supply volatility.

The reopening comes as a ceasefire between Israel and Hezbollah appears to be holding, potentially creating momentum for broader negotiations between the U.S. and Iran. Officials have been weighing an extension of their own ceasefire, with talks ongoing over key issues including nuclear policy, sanctions relief and maritime security.

While the reopening signals a potential easing of tensions, uncertainty remains over how long shipping flows will normalize. The U.S. has maintained pressure on Iranian exports, including recent enforcement actions and a naval presence in the region, while warning that military operations could resume if negotiations falter.

Any sustained reopening of Hormuz will be critical for stabilizing global oil markets, particularly as supply disruptions from the region have driven sharp price swings and tightened available crude volumes.

Source: Bloomberg