Oil Prices Plunge as Strait of Hormuz Reopens Amid U.S.-Iran Ceasefire Talks

Global oil prices fell sharply on Friday after Iran and the United States jointly announced the temporary reopening of the Strait of Hormuz, easing fears over a major disruption to the world's oil supply. Brent crude dropped nearly 9% to $90.63 per barrel, while U.S. West Texas Intermediate fell over 11% to $84.14 per barrel, though both recovered slightly from their session lows.

Iranian Foreign Minister Abbas Araghchi confirmed the waterway would remain open for commercial vessels throughout the ceasefire period. U.S. President Donald Trump welcomed the news on social media, calling it a significant development. The announcement followed Trump's declaration of a 10-day ceasefire between Israel and Lebanon, which had been a key sticking point in broader U.S.-Iran negotiations.

Interestingly, Reuters reported that investors placed roughly $760 million in bets on declining oil prices just minutes before Iran made the announcement public, raising eyebrows among market watchers.

Trump indicated that Washington and Tehran are close to finalizing a deal, noting Iran has agreed not to pursue nuclear weapons for over two decades. In exchange, Iran is seeking the lifting of international sanctions. Reports also surfaced of a three-page draft proposal that included the release of $20 billion in frozen Iranian assets, though Trump later stated Iran would receive no frozen funds and would suspend its nuclear program indefinitely.

Despite progress, senior Iranian officials cautioned that significant differences remain, adding that keeping the strait open depends on U.S. compliance with ceasefire terms.

The Strait of Hormuz handles roughly one-fifth of global oil flow. Its disruption had sent crude prices surging to $120 per barrel from pre-conflict levels near $70, fueling global inflation concerns and uncertainty around central bank policy worldwide.