Global oil prices tumbled sharply after Iran declared it would keep the Strait of Hormuz "completely open" to commercial shipping for the duration of the current ceasefire in the US-Israel conflict with Iran.
Brent crude dropped to $88 per barrel following the announcement, a significant retreat from earlier highs above $98. The Strait of Hormuz, a narrow channel south of Iran, typically handles about one-fifth of the world's oil and liquefied natural gas shipments.
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 development, posting on social media, "IRAN HAS JUST ANNOUNCED THAT THE STRAIT OF IRAN IS FULLY OPEN AND READY FOR FULL PASSAGE. THANK YOU!" He added that Iran had agreed "to never close the Strait of Hormuz again... it will no longer be used as a weapon against the world."
However, maritime authorities expressed caution. The international shipping organization BIMCO advised operators that "the status of mine threats in the traffic separation scheme is unclear" and recommended companies consider avoiding the area. Jakob Larsen, BIMCO's chief safety and security officer, noted, "This means that the Traffic Separation Scheme is not declared safe for transit at this point."
The International Maritime Organization is currently verifying Iran's commitment to reopening the waterway, with Secretary General Arsenio Dominguez stating they are examining compliance with freedom of navigation principles.
Market reactions were immediate, with global stock indices rallying on the news. The S&P 500 closed up 1.2%, while European markets in Paris and Frankfurt gained approximately 2%.
Industry sources remained skeptical about immediate changes. One anonymous shipping operator told reporters, "We don't feel like we need to be taking unnecessary risks and our company approach is that we won't be the first to go through the Strait." Stena Bulk, which operates tankers in the region, said it was "monitoring developments closely" and emphasized that "the safety of our crew and vessels governs every routing decision."
Analysts noted the limited timeframe for potential shipping activity. Kieran Tompkins of Capital Economics observed that the ceasefire, scheduled to end in nine days, "offers only a narrow window of opportunity for oil tankers to navigate the Strait, load up, and exit."
Supply chain experts warned that consumers would continue facing pressure even with improved shipping access. Professor ManMohan Sodhi of Bayes Business School noted, "Supply chains will take months to clear," suggesting that price relief at fuel pumps and in agricultural markets would be gradual.
The Strait had been effectively closed since late February when US and Israeli military strikes began against Iran, reducing tanker traffic to minimal levels and driving Brent crude prices from under $70 per barrel to peaks exceeding $119 in March.