PARAMARIBO – Oil prices plunged 9 percent after Iran opened the strait, but later recovered as the U.S. blockade held. Various international media reported this on Saturday.
Friday was a textbook example of erratic market movements. Oil prices fell sharply and stock prices rose after Iran announced the Strait of Hormuz was open to commercial shipping during a ceasefire between Israel and Lebanon. Within hours, however, Iran reversed that decision, after which optimism faded again.
Brent crude, the international benchmark, fell more than 9 percent to $90.38 a barrel on Friday, the lowest level since March 10. The US benchmark price, West Texas Intermediate, fell more than 10 percent to around $84 per barrel. Stock markets responded enthusiastically: the Dow Jones Industrial Average closed 869 points higher (+1.7%), the S&P 500 rose 1.2 percent and the Nasdaq gained 1.5 percent.
What Iran said about the opening of Hormuz
Iranian Foreign Minister Abbas Araghchi announced that all commercial ships would be allowed to sail freely through the Strait of Hormuz during the 10-day ceasefire between Israel and Lebanon. President Donald Trump quickly confirmed this via social media, stating that the waterway was fully open to shipping.
But a few hours later, Iran partially withdrew that statement. Tehran stated that the strait will remain closed as long as the US Navy maintains its blockade of Iranian ports. Trump had made clear earlier that day that the blockade would remain until a broader peace deal is reached, including agreements on Iran’s nuclear program. This led to a stalemate that sent markets into the weekend in turmoil.
Why the Strait of Hormuz is so important
The Strait of Hormuz is one of the major bottlenecks in the global economy. About 20 million barrels of oil pass through the country every day, accounting for about a fifth of the world’s oil supply. When Iran effectively closed the passage after US-Israeli attacks on February 28, it led to the worst oil supply shock ever, according to the International Energy Agency.
In March, oil prices rose by the largest monthly increase on record, the agency said. In the United States, gasoline prices averaged $4.07 per gallon on Friday, more than 30 percent higher than before the war. Despite the drop on Friday, US oil prices are still more than 30 percent above pre-conflict levels.
The brief moment of opening and what it showed
Data from shipping tracker MarineTraffic showed a marked increase in the number of ships passing through the strait on Friday morning. Maritime analyst Michelle Wiese Bockmann called it the busiest activity since the start of the war, when the passage was effectively closed. According to her, something had changed during the night, causing ships that were waiting earlier to suddenly move.
That increase underlined the built-up pressure in the global shipping industry. Although Iran had allowed a limited number of controlled ships through since the start of the conflict, traffic was well below normal levels. The brief announcement of full go ahead was enough to unleash a flurry of activity before the rollback brought renewed uncertainty.
The current state of affairs
Pakistani officials say they are pushing for additional talks between the United States and Iran ahead of the April 22 ceasefire deadline. It is still uncertain whether these discussions will yield results before that period expires.
Oil prices have fluctuated sharply since the start of the conflict. A peak of $119 per barrel was reached on March 19, followed by the decline on Friday. This volatility shows how closely global energy prices are linked to the situation in and around the Strait of Hormuz. A sustainable reopening would provide relief for consumers and markets worldwide, but the rollback makes it clear that such relief will not be forthcoming for the time being.
