Global financial markets experienced a dramatic shift on Friday as Iran's declaration to reopen the Strait of Hormuz sent oil prices tumbling and propelled stock indices to record highs. The announcement, linked to a ceasefire between Israel and Lebanon, alleviated fears of a prolonged disruption to one of the world's most critical energy trade routes.
Iranian Foreign Minister Abbas Araghchi stated, "In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire." This strategic waterway, through which approximately one-fifth of the world's crude oil flows, had been obstructed by Iran since late February, contributing to oil prices soaring near $120 per barrel and unsettling the global economy.
Following Tehran's statement, both Brent and West Texas Intermediate (WTI) crude benchmarks fell below $90 per barrel. Brent crude later pared some losses to close at $90.38, marking a 9.1 percent decline for the day.
"This news is having an immediate impact on markets," said Kathleen Brooks, research director at XTB.
The reopening triggered a surge in equity markets, extending a rally that began in late March amid hopes for a de-escalation in Middle East tensions. In New York, the S&P 500 climbed 1.2 percent to close at 7,126.06, achieving a 4.5 percent weekly gain. European markets also rallied, with Frankfurt and Paris indices each rising by two percent.
Angelo Kourkafas of Edward Jones noted, "We had seen a big move the last two weeks and now it's just really pricing completely out the worst-case scenario. Geopolitical developments are moving in the right direction and at the same time the earning strength is hard to ignore."
U.S. President Donald Trump welcomed the development, telling Agence France-Presse, "We're very close to having a deal. There are no sticking points at all left with Tehran." However, Iran later contradicted Trump on a key issue, asserting that its stockpile of enriched uranium would not be transferred elsewhere.
The shipping industry responded cautiously to the announcement. A spokesperson for German transportation firm Hapag-Lloyd, which has vessels stranded in the Gulf, called the reopening "in general... good news," but emphasized that shippers require specific details on safe navigation routes and sequencing due to lingering concerns about maritime mines.