Oil Prices Plunge 10% as Iran Reopens Strait of Hormuz During Ceasefire

According to 'The Wall Street Journal', oil prices "plunged around 10 per cent" after Iran's Foreign Minister said the strait was open following a ceasefire between Israel and Lebanon.

The sharp drop reflected market optimism that tensions around the Persian Gulf could ease, even as uncertainties remained over the durability of the ceasefire and the scope of the reopening.

Separately, CNN reported that Brent crude, the global benchmark, fell about 10 per cent to around $89 per barrel, while West Texas Intermediate (WTI), the US benchmark, dropped more than 10 per cent to roughly $81.50 per barrel.

The declines pushed oil prices to their lowest levels in several weeks, according to the data presented in a price chart on page 4 of the CNN report, which tracks the sharp fall following the announcement.

Markets also reacted positively beyond energy. CNN said US stocks rallied, with the Dow rising 640 points, or 1.2 per cent, while the S&P 500 and Nasdaq also gained.

The trigger for the sell-off in oil came after Iran's Foreign Minister Abbas Araghchi declared that "the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire."

Traders interpreted the move as a potential easing of supply constraints that had driven prices higher since the conflict escalated.

However, analysts cautioned that the market reaction may be ahead of reality. The Wall Street Journal, citing shipping industry experts, noted that Iran's announcement "doesn't immediately give anybody enough clarity to make any firm decisions," highlighting continued uncertainty over safe navigation.

The US position has added to that uncertainty. President Donald Trump said the naval blockade on Iranian ports would "remain in full force," raising questions about how freely vessels can operate despite the reopening claim.

That contradiction - between Iran's declaration and continued US enforcement measures - has left energy markets balancing optimism with caution.

The Strait of Hormuz is a vital artery for global energy trade, and disruptions there have an immediate impact on oil prices. Earlier in the conflict, reduced tanker traffic and attacks on shipping had tightened supply and pushed prices sharply higher.

The latest drop suggests markets are pricing in a temporary stabilisation. But with the ceasefire limited in duration and geopolitical tensions unresolved, analysts warn that volatility is likely to persist in the near term.

- IANS