Iran Declares Strait of Hormuz Open During Ceasefire; Oil Prices Drop to $88
Oil prices plummeted after Iran declared the Strait of Hormuz “completely open” to commercial ships for the duration of the current ceasefire in the US-Israel war with Iran. The price of a barrel of Brent crude fell to USD#88 after the announcement, having been above USD#98 earlier on Friday.
The Strait of Hormuz, a narrow passage south of Iran, is crucial for global energy markets, facilitating the transport of a fifth of the world’s oil and liquefied natural gas. Its effective closure by Iran since the US and Israel launched strikes on the country in late February drastically reduced global oil and gas availability, pushing prices from under USD#70 to over USD#119 per barrel in March.
Iranian Foreign Minister Abbas Araghchi stated, “The passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire.” US President Donald Trump welcomed the statement; however, maritime groups are still assessing the practical implications. The international shipping body BIMCO advised operators to consider avoiding the area due to unclear mine threats, stating the Traffic Separation Scheme is not yet declared safe. The International Maritime Organization (IMO) is also verifying Iran’s commitment to secure passage.
The closure of the waterway has had wider economic implications, including rising petrol and diesel prices in the UK, and concerns over jet fuel supply. Furthermore, the disruption to a major supply line for fertiliser, with a third of the world’s key fertiliser chemicals passing through the Strait, has raised the prospect of higher food prices.
Despite Iran’s announcement, some oil and gas shipping operators indicated they would not be the first to transit the Strait due to ongoing safety concerns. Analysts noted that the nine-day ceasefire offers only a narrow window for tankers, suggesting a full return to pre-war shipping norms may not occur immediately. Supply chains are expected to take months to clear even if a permanent peace deal is reached.