A sudden diplomatic breakthrough in the Middle East has sent global oil markets tumbling, as the reopening of a critical supply route removes risk, restores confidence, and reshapes energy prices overnight.
Iran has fully reopened the Strait of Hormuz, triggering a sharp global oil price decline and reshaping the outlook for energy markets. US President Donald Trump announced that Iran has agreed not to close the strategic waterway again, signaling a major shift in geopolitical tensions. Posting on his Truth Social platform, Trump emphasized that the Strait of Hormuz will no longer be used as a tool of pressure against global trade and energy supply.
Global crude oil prices reacted immediately to the development, falling by nearly 11 percent on Friday. The drop followed confirmation from Iran’s Foreign Minister that the Strait of Hormuz would remain open to all commercial vessels during the current ceasefire period. This move has restored confidence in global supply chains and reduced fears of disruption in one of the world’s most critical oil transit routes.
With the easing of tensions, Brent crude oil prices fell sharply by $10.59, representing a 10.7 percent decline, bringing the price down to $88.80 per barrel. This significant drop reflects the removal of geopolitical risk premiums that had previously driven prices higher.
Similarly, US West Texas Intermediate crude oil also recorded a steep fall, declining by $10.80 or 11.4 percent to $83.89 per barrel. The synchronized drop across major benchmarks highlights the global nature of the market response to the reopening of the Strait of Hormuz.
This price level is now considered the lowest recorded since March 11, marking a notable correction in the oil market after weeks of volatility driven by geopolitical uncertainty and supply concerns.
Economic analysts point out that the primary driver behind this sharp decline is the easing of tensions in the Middle East and the reopening of key supply routes. The restoration of stability in the region has significantly reduced uncertainty, allowing oil markets to stabilize and adjust to a more balanced supply outlook.
