Iran Reopens Strait of Hormuz Amid Ceasefire, Oil Prices Decline
Iran announces the reopening of the Strait of Hormuz during the ceasefire, leading to a significant drop in oil prices and a positive response in global markets.
Iran has declared the Strait of Hormuz "completely open" to commercial vessels for the duration of the current ceasefire. Foreign Minister Abbas Araghchi stated that the passage is open on a coordinated route as announced by Iran's Ports and Maritime Organisation.
The Strait of Hormuz is a critical maritime passage through which approximately 20% of the world's oil transits. Its reopening has led to a significant drop in oil prices, with Brent crude falling to $88 per barrel, down from over $98 earlier in the day.
Global markets responded positively to the announcement. The S&P 500 index rose by 1.2%, while European markets also saw gains: the CAC 40 in Paris and the DAX in Frankfurt both increased by around 2%, and London's FTSE 100 closed 0.7% higher.
U.S. President Donald Trump welcomed Iran's decision, stating on social media that the Strait of Hormuz is "fully open and ready for full passage." However, he emphasized that the U.S. naval blockade of Iranian ports will remain "in full force and effect" until a comprehensive peace deal is finalized.
Despite the reopening, the international shipping body BIMCO has advised caution. Chief Safety and Security Officer Jakob Larsen noted that the status of mine threats in the area is unclear, suggesting that shipping companies should consider avoiding the region until safety is assured.
The ceasefire, set to end in nine days, offers a limited window for oil tankers to navigate the strait. Analysts suggest that while the number of vessels may not return to pre-war levels immediately, the reopening provides an opportunity for trapped tankers to exit.
