Oil prices have fallen sharply after Iran announced that the Strait of Hormuz would remain “completely open” to commercial shipping for the duration of a ceasefire in the US-Israel conflict involving Iran. Following the announcement, Brent crude dropped to around $88 per barrel, down from over $98 earlier in the day. The Strait of Hormuz, located south of Iran, is a critical global route through which about a fifth of the world’s oil and liquefied natural gas is transported. US President Donald Trump welcomed Iran’s statement, although maritime authorities are still working to confirm its full implementation. Iran’s Foreign Minister Abbas Araghchi stated that “the passage for all commercial vessels through the Strait of Hormuz is declared completely open for the remaining period of ceasefire.”
Global financial markets responded positively, with major indices recording gains. The S&P 500 rose by 1.2%, while Europe’s CAC and DAX indices each closed about 2% higher. The UK’s FTSE 100 also ended the day up by 0.7%. The Strait had seen major disruptions since military strikes by the US and Israel in Iran earlier in the year, which significantly reduced tanker traffic and pushed oil prices above $100 per barrel at their peak in March. Although Iran has declared the waterway open, shipping industry groups remain cautious. BIMCO, a maritime trade organization, warned that risks in the area are still unclear, advising operators to consider avoiding the route due to potential mine threats.
The International Maritime Organization (IMO) also said it is reviewing the announcement to ensure it aligns with safe navigation standards for global shipping routes. Energy price swings have already impacted consumers, with higher fuel costs affecting transport, aviation, and food production. Fertiliser supply chains have also been disrupted, raising concerns about rising food prices, as a significant share of global fertiliser materials pass through the Strait. However, even before the latest announcement, fuel prices in some regions, including the UK, had begun to ease slightly.
Despite Iran’s declaration, some shipping companies say they remain cautious. Several operators stated they will avoid the Strait until they are fully confident it is safe, citing ongoing security risks. Analysts note that even with the ceasefire, supply chains will take time to stabilize, and energy markets may continue to feel pressure in the coming months as shipping activity gradually returns to normal levels.
Source: https://www.bbc.com/
