Oil prices plunged after Iran confirmed the Strait of Hormuz remains open and Donald Trump indicated a potential nuclear program suspension, easing geopolitical tensions and impacting global energy markets.
Sharp rises in oil prices over the last month have pushed up petrol and diesel prices for drivers and sparked concerns about the supply of jet fuel. The closure of the key waterway has also cut off a major fertilizer supply line used by farmers, raising the prospect of higher food prices as a result of the conflict.
Oil prices dropped on Friday after Iran's foreign minister said the Strait of Hormuz was fully open to commercial traffic for the remainder of the 10-day ceasefire between Israel and Lebanon, and President Trump said Iran had agreed to indefinitely suspend its nuclear program.
Futures on Brent crude, the international pricing benchmark, fell 11% to trade below $89 per barrel, while those on US benchmark West Texas Intermediate crude fell by 11.1% to trade at $81. Both products opened above $100 that week.
"In line with the ceasefire in Lebanon, the passage for all commercial vessels through the Strait of Hormuz is declared completely open for the remaining period of ceasefire," Iranian foreign minister Abbas Araghchi wrote in a post on X. He added that vessels will be allowed to use the "coordinated route as already announced" by the regime.
Several hours later, President Trump said in an interview with Bloomberg News that Iran has agreed to suspend its nuclear program with no timeline for a restart, and that "most of the main points are finalized" for a deal to end the war.
President Trump added that Iran would not be receiving any frozen funds in return. Axios reported previously that the US is reportedly considering a deal to release $20 billion in frozen Iranian funds in exchange for the regime surrendering its stockpile of enriched uranium.
In comments to Reuters, President Trump said the US would be working with Iran to recover the regime's uranium stockpile, saying, "We're going to go in with Iran, at a nice leisurely pace, and go down and start excavating with big machinery.”
On Thursday, President Trump announced in a Truth Social post that Israel and Lebanon had reached a 10-day ceasefire agreement, marking a temporary break in a side conflict that has snarled any potential positive movement between the US and Iran and potentially opening the way for second-round talks.
"I just had excellent conversations with the Highly Respected President Joseph Aoun, of Lebanon, and Prime Minister Bibi Netanyahu, of Israel. These two leaders have agreed that in order to achieve PEACE between their countries, they will formally begin a 10 Day CEASEFIRE at 5 P.M. EST," the president wrote.
Iran state TV reported Friday that any vessels looking to make the crossing must coordinate with the Revolutionary Guard Corps, according to Bloomberg. It was also not immediately clear which route Iran wanted ship captains to take. Iranian leaders have said previously that ships wanting to traverse the strait must pass close to the Iranian coast, while on Wednesday, the regime offered a deal for safe passage of vessels in Omani waters so long as the US and Iran could agree to a firm ceasefire.
Before the conflict, Brent crude was trading at under $70 per barrel. It rose above $100 before peaking at more than $119 per barrel in March.