Oil price falls below $90 after Iran says Strait of Hormuz is open

Iran’s foreign minister Abbas Araghchi said the Strait of Hormuz would be open to commercial shipping for the duration of a 10-day ceasefire between Israel and Lebanon, removing a key near-term supply risk that had supported elevated oil prices. The announcement immediately reduced the geopolitical premium in energy markets.

Araghchi posted on X that passage through the strait is “completely open” for the remaining period of the ceasefire, a step linked to a truce announced with U.S. mediation. The declaration suggested that tankers stranded in the Gulf could resume voyages, potentially unlocking millions of barrels of crude and LNG currently sidelined by the conflict.

Markets reacted sharply: Brent and WTI futures plunged, with U.S. crude slipping below $90 a barrel in intraday trading and gas benchmarks also easing as traders priced in a possible restoration of flows. Global equity indices rallied on the reduced risk outlook, reflecting a rotation back into cyclical assets as the immediate supply shock appeared to ease.

In broader context, the Strait of Hormuz is a critical chokepoint for roughly one-fifth of seaborne oil trade; closures have previously pushed spot prices sharply higher. The latest move follows weeks of disruption that tightened physical markets and elevated volatility, meaning that while a temporary reopening eases pressure, structural uncertainties around production and logistics remain.

Analysts caution that the durability of the price decline depends on whether the ceasefire holds and whether commercial traffic actually normalises at scale. If flows resume steadily, prices could stabilise lower, but any setback in the truce or fresh military actions would likely restore a sizeable risk premium and renew upward price pressure. Traders will monitor tanker movements, official maritime notices and diplomatic signals in the coming days.