Oil prices dropped sharply and US stocks surged Friday after the Iranian foreign minister said the Strait of Hormuz will be “completely open” for commercial transit during the remainder of the ceasefire.
Brent crude, the global benchmark, fell 13%, to $86.30 per barrel. WTI, the US benchmark, also sank 13% to $79.20 per barrel. Oil prices traded at their lowest levels since the first week of March.
“In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire,” Iranian Foreign Minister Seyed Abbas Araghchi wrote in a post on X.
President Donald Trump on Thursday said Israel and Lebanon agreed to a 10-day ceasefire.
US stocks rallied: The Dow surged 1,032 points, or 2.1%, and recouped all of its losses since the war with Iran began. The S&P 500 gained 1.3%, and the Nasdaq rose 1.6%, extending gains after recovering their war-related losses earlier this week. The S&P and Nasdaq are coming off back-to-back days of record highs.
Stocks have rallied sharply this month on optimism about the US-Iran ceasefire and the recent pullback in oil prices. The S&P 500 has gained more than 12% since its recent nadir on March 30, a stunning rebound.
The Nasdaq Composite has gained 12 days in a row, its longest winning streak since 2009. A gain today would put the index at its longest winning streak since 1992.
The Strait of Hormuz has been a critical focus for markets. A willingness to open the key global shipping channel, even briefly, is causing swift relief for oil prices.
Treasury yields fell sharply Friday as bond traders reacted to the announcement of the opening of the Strait of Hormuz and leaned into hope that the worst of the oil shock might be over. Yet some strategists were hesitant to sound the all-clear.
“Markets care more about the free flow of oil in the short term. But we urge some caution,” Doug Beath, global equity strategist at Wells Fargo Investment Institute, said in a note. “Bottom line: Everything still depends on how the negotiations continue.”
Trump in an all-caps Truth Social post Friday morning said, “Iran has just announced that the Strait of Iran is fully open and ready for full passage.”
Trump in another post shortly after welcomed the news that the Strait of Hormuz has reopened but clarified that the current US naval blockade will remain in place “until such time as our transaction with Iran is 100% complete.”
“This process should go very quickly in that most of the points are already negotiated,” Trump wrote.
Despite tumbling, Brent and US crude remain above their pre-war levels of $73 and $67 per barrel, respectively.
This is a developing story and will be updated.
