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Iran Declares Strait of Hormuz Open During Ceasefire, Oil Prices Drop 9%

Iran Declares Strait of Hormuz Open During Ceasefire, Oil Prices Drop 9%
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Iran declared the Strait of Hormuz “completely open” to commercial traffic during a fragile regional ceasefire on Friday, triggering a sharp fall of more than 9% in global oil prices and cautious optimism that a path out of the two‑month conflict with the United States and Israel might be emerging washingtonpost +1. But with Washington’s naval blockade of Iranian ports still in place and mines and insurance risks unresolved, shipping traffic remained far below normal levels and many tankers stayed put politico +1.

Foreign Minister Abbas Araghchi announced on X that “passage for all commercial vessels through the Strait of Hormuz is declared completely open for the remaining period of [the] ceasefire,” tying the move explicitly to a 10‑day truce between Israel and Lebanon and to pre‑agreed “coordinated routes” overseen by Iran’s ports authority and security forces washingtonpost +1. President Donald Trump simultaneously welcomed the reopening but said the U.S. naval blockade on Iran would “remain in full force” until a broader deal is finalized, underscoring that the move is a temporary, conditional opening rather than a full restoration of pre‑war norms vox.

Conditional Reopening Meets Maritime Reality

Iran’s offer allowed commercial vessels to transit only along designated lanes, coordinated with the Islamic Revolutionary Guard Corps, while military ships remain barred washingtonpost +1. Tracking data on Friday evening showed roughly 20 ships attempting to move toward the Gulf exit but most halted or turned back, reflecting uncertainty over the risk of mines and the practical meaning of Tehran’s new rules politico.

The UN’s International Maritime Organization said it was still “verifying” the announcement’s compliance with freedom‑of‑navigation norms, and shipowners’ groups warned of unresolved questions around escorts, liability and war‑risk insurance politico +1. Analysts also pointed to Iran’s earlier push to charge transit “tolls” – reported at up to $2 million per ship – as part of any settlement, a proposal legal experts say would clash with international law on straits and could permanently raise costs if it becomes embedded in a deal npr +1.

Energy Markets Reprice Risk, But Stability Elusive

Oil markets reacted immediately: Brent crude settled down $9.01, or 9.07%, at $90.38 a barrel, while U.S. West Texas Intermediate fell $10.48, or 11.45%, to $83.85, as traders unwound a war‑driven risk premium built up during weeks of near‑closure in Hormuz cnbc. Roughly 20% of the world’s crude and liquefied natural gas typically passes through the narrow waterway each day, so even the prospect of normalized flows has an outsized impact on prices and on fuel costs from Europe to Asia nypost.

Energy strategists cautioned, however, that actual relief for consumers will lag. It takes about three weeks for tankers to reach European hubs from the Gulf, and any renewed disruption – from a lapse in the ceasefire to a clash between Iranian forces and the U.S. blockade – could quickly restore price volatility cnbc. One maritime security consultant warned that “scenarios are looking pretty bleak for shipping over the next few weeks,” citing mine‑clearance needs and the risk of miscalculation in a crowded, militarized strait nypost.

The Bigger Picture

The partial reopening signalled that Tehran is willing to trade some control over the world’s most sensitive energy chokepoint for sanctions relief and security guarantees, while Washington is testing whether economic pressure via blockade can coexist with resumed oil trade washingtonpost +1. Until there is a durable agreement that clarifies legal rules, removes mine threats and resolves the status of any proposed transit fees, Hormuz is likely to remain a chronic source of risk rather than a fully reopened artery – leaving global energy prices, and regional security, on edge. cnbc +1