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Update: WTI Oil Plunges 11% as Iran Reopens the Strait of Hormuz to Commercial Shipping

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(Updates prices and adds detail.)

West Texas Intermediate (WTI) crude closed sharply lower on Friday after Iran reopened the Strait of Hormuz to commercial traffic, freeing up tankers trapped in the Persian Gulf and ending a supply shock that sent prices to four-year highs.

WTI crude oil for May delivery closed down US$10.84, or 11.5%, to settle at US$83.85 per barrel, while June Brent oil last seen was down US$9.45 to US$89.94.

Abbas Araghchi, Iran's foreign minister, said in a social-media post that "passage for all commercial vessels through strait of Hormuz is declared completely open for the remaining period of ceasefire".

Ceasefires are holding on both fronts in the Middle East, as Israel and Lebanon on Thursday agreed to a ceasefire in Israel's war on Hezbollah militants in the country. There are also hopes for further talks between the U.S. and Iran to end their conflict that had closed the Strait of Hormuz, a chokepoint for 20% of daily global oil and LNG demand supplied by Persian Gulf nations.

Though the situation remains unclear and the full return of production from Persian Gulf states is likely to be slow as shut-in oil fields resume production and repairs to energy infrastructure attacked by Iran. Still, there are reports tankers have begun moving toward the Strait.

"Rystad Energy is still tracking approximately 12.4 million barrels per day (bpd) of curtailed oil production across Saudi Arabia, Iraq, Iran, the UAE, Kuwait, Qatar, and Bahrain. Even so, today's announcement has materially shifted the probability distribution of outcomes. The market is not waiting for a formal deal - it is pricing in the possibility of one," said Artem Abramov, Rystad's Deputy Head of Analysis.

An Israeli stand down on attacks in Lebanon was a key part of Iran's demands in talks with the U.S. and may ease the path for further talks between the two countries. U.S. President Trump on Thursday said he expects talks moderated by Pakistan to soon resume.

The Wall Street Journal on Friday reported comments from Iranian Deputy Foreign Minister Saeed Khatibzadeh that Iran is expecting talks to result in a permanent settlement to the war rather than another temporary ceasefire, citing Turkey's state news agency, while saying Iran is looking to regulate transits through the vital Strait

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