Ziggy Ojiegbe

Iran said it has fully reopened the Strait of Hormuz to commercial shipping, triggering a sharp drop in global energy prices and raising cautious optimism that tensions with the United States may be easing, even as Washington insists its naval blockade on Iranian exports remains in place.

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In a statement on Friday, Iranian Foreign Minister Abbas Araghchi said the vital waterway — which carries about 20% of the world’s oil supply — is now “completely open” to commercial vessels. He added that ships would transit along routes designated by Iranian authorities, though it remains unclear whether additional conditions, such as transit fees, will apply.

The announcement comes as a fragile 10-day ceasefire between Israel and the Iran-backed Hezbollah group in Lebanon appears to be holding, easing fears of a broader regional conflict that had disrupted energy flows for weeks.

However, the reopening has not been matched by a full de-escalation from Washington. U.S. President Donald Trump initially welcomed the move, saying the strait was “fully open and ready for full passage,” before quickly clarifying that the U.S. Navy’s blockade on Iranian ships and ports would remain “in full force” until a comprehensive agreement is reached over Tehran’s nuclear program.

The conflicting signals underscore the fragile state of diplomacy. While Trump suggested that Iran may be willing to suspend its nuclear program and hinted at possible talks in the coming days, Tehran has not confirmed any such concessions. Iranian officials have also warned that continued U.S. naval restrictions could be viewed as a violation of the ceasefire and may prompt a response.

Despite the uncertainty, markets reacted swiftly to the reopening. Oil prices plunged as traders unwound the geopolitical risk premium built up during the conflict. Brent crude dropped more than 9% to around $90 per barrel, while U.S. benchmark West Texas Intermediate fell to the mid-$80s. European natural gas prices also declined sharply, falling by as much as 10%.

The sell-off reflects expectations that the resumption of tanker traffic through the Gulf could restore millions of barrels per day to global supply chains. Shipping data already shows signs of cautious normalization, with several tankers inside the Persian Gulf beginning to move toward the strait after Iran’s announcement.

The waterway’s closure had been one of the most disruptive elements of the seven-week conflict involving the U.S., Israel, and Iran, contributing to one of the most severe energy supply shocks in recent years. The disruption tightened fuel markets globally, particularly for refined products such as diesel and jet fuel, and raised concerns about inflation and economic growth.

Still, analysts warn that the situation remains fluid. Some note that Iran’s reopening may be limited to specific routes along its coastline, rather than a full restoration of unrestricted passage. Others caution that even if a broader agreement is reached, it could take weeks or months for shipping patterns and inventories to fully recover.

Beyond energy markets, the shift has rippled across global financial systems. Equity markets rallied on expectations of lower energy costs, while investors increased bets that easing inflation pressures could give central banks, including the U.S. Federal Reserve, more room to consider interest rate cuts later in the year.

At the same time, geopolitical risks persist. Key sticking points in U.S.–Iran negotiations — including the fate of Iran’s enriched uranium, the duration of any nuclear restrictions, and long-term control over the Strait of Hormuz — remain unresolved. The durability of the Lebanon ceasefire also remains uncertain, with sporadic violence reported even after the truce took effect.

For now, the reopening of one of the world’s most critical النفط transit routes has provided immediate relief to markets. But with military tensions, sanctions, and diplomatic negotiations still in play, the outlook for sustained stability in global energy flows remains far from assured.