Brent crude futures dropped nearly 10.5% on Friday to approximately $88.96 per barrel and West Texas Intermediate fell more than 12% to around $83.20, as Iran announced it would open the Strait of Hormuz for the duration of a 10-day ceasefire between Israel and Hezbollah in Lebanon.
The moves erased the majority of oil price gains accumulated since the US-Iran conflict began on February 28, a period in which Brent had at various points traded above $120 per barrel as the strait’s closure threatened to disrupt roughly 20% of global seaborne crude oil supply.
Iranian Foreign Minister Abbas Araghchi announced the strait would reopen for vessels sailing a “coordinated route” prescribed by Iran’s maritime authorities. Trump responded publicly by thanking Iran for opening the waterway while simultaneously confirming on social media that a US naval blockade of Iranian ports would remain “in FULL FORCE” until a comprehensive deal is reached.
The two positions create a structural tension: commercial shipping through the strait may resume under Iranian coordination while the blockade of Iranian ports themselves continues, a distinction that matters for oil market supply mechanics but is operationally novel enough to require market participants to reassess their models in real time.
The European natural gas market reflected the same relief signal, with benchmark TTF futures falling as much as 10% to approximately €38 per megawatt hour. European gas prices had been elevated since Iran’s March attack on Qatar’s Ras Laffan LNG complex, which damaged approximately 17% of Qatar’s LNG production capacity and caused Asian LNG spot prices to rise more than 140% at their peak. Any credible path toward normalising Strait of Hormuz transit reduces the medium-term LNG supply risk that has been priced into European winter storage premium positions.
The market’s sharp reaction reflects how much of the current oil price level was built on a war risk premium rather than fundamental supply-demand equilibrium. ING analysts had estimated that approximately 13 million barrels per day of supply had been disrupted by the combination of the strait closure and the US port blockade. At spot prices before Friday’s move, that disruption was carrying a premium of approximately $20-30 per barrel above what the underlying fundamental demand picture would justify. Whether the ceasefire-based opening holds, and whether the US-Iran diplomatic process produces a permanent resolution before the ceasefire expires on April 22, are the two questions that will determine whether Friday’s price collapse marks the beginning of a genuine oil market normalisation or a temporary relief trade.
