Arabic version: انخفاض أسعار النفط بعد إعلان إيران عن مضيق هرمز
Oil prices have plummeted after Iran said the Strait of Hormuz would be ‘completely open’ to commercial ships for the remainder of the ceasefire. The cost of a barrel of Brent crude fell to $88 dollars a barrel, having been above $98 earlier on Friday. The Strait of Hormuz is a narrow strip of water linking the Gulf to the Arabian Sea, through which a fifth of the world’s oil and liquefied natural gas is typically transported.
According to BBC News, U.S. President Donald Trump welcomed the news, but maritime groups are still verifying the Iranian announcement. Iranian Foreign Minister Abbas Araghchi said: “The passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire.”
Global markets rallied on the announcement, with the major U.S. stock indices rising in early trading. The S&P 500 rose by 0.8%, while the Nasdaq and Dow Jones Industrial Average (DJIA) were both up by more than 1%. European shares also rose in reaction to the news, with the CAC index in Paris and DAX in Frankfurt both climbing by more than 2%, while London’s FTSE 100 rose by around 0.5%.
Despite Iran’s assurances, the international shipping body BIMCO expressed concern, in advice to operators, about the ongoing risks. Jakob Larsen, BIMCO chief safety and security officer, said: “The status of mine threats in the traffic separation scheme is unclear and BIMCO believes shipping companies should consider avoiding the area.”
Meanwhile, the head of the International Maritime Organization (IMO) is trying to understand the details behind Iran’s commitment to reopening the Strait of Hormuz. The IMO’s secretary general Arsenio Dominguez said on social media: “We are currently verifying the recent announcement related to the reopening of the Strait of Hormuz, in terms of its compliance with freedom of navigation for all merchant vessels and secure passage using the IMO established traffic separation scheme.”
The reopening of the Strait follows a ceasefire agreement between Israel and Lebanon. However, industry experts warn that while the ceasefire presents a narrow window of opportunity for oil tankers to navigate the Strait, full recovery of shipping traffic to pre-war norms may take time. Supply chain disruptions and rising costs for consumers are expected to persist even with a potential longer-term peace deal.
