-- Crude oil futures tumbled by 11% in midday trading on Friday after Iran declared the Strait of Hormuz open during the ceasefire between Israel and Lebanon, raising hopes of easing supply disruptions from the Middle East.
Front-month West Texas Intermediate crude futures plunged by 11.36% to $83.91 per barrel, while Brent futures plunged by 9.55% to $89.85/bbl.
Iran's Foreign Minister Abbas Araghchi said on Friday that the Hormuz "is declared completely open," even as a US naval blockade continues to constrain flows through the strategic waterway.
"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 the ceasefire," Araghchi said in the surprise announcement on X.
Israel and Lebanon also agreed to a 10-day ceasefire on Thursday, a move that is expected to ease regional tensions.
The opening of Hormuz was made possible by a ceasefire between Israel and Lebanon, strategists from Macquarie said, noting that despite the announcements, this can only be described as a temporary and tenuous agreement.
However, Araghchi said that vessels must transit through a "coordinated route" announced by Iran's maritime authorities. An Iranian Supreme National Security Council official also said that vessels transiting the Strait will require permission from the Islamic Revolution Guards Corps, according to media reports.
On Friday, President Trump also said in a social media post that Iran had agreed never to close the Hormuz again, but separately, he reiterated that a US naval blockade of Iran's ports will remain in "full force" until the US reaches a deal with Iran.
Iranian authorities reportedly said vessels are not allowed to pass if they or their cargoes are linked to hostile nations. The Strait will also be closed if the US naval blockade continues.
The reopening of the Hormuz stoked optimism that there may be an end in sight to the Middle East conflict, which led to the worst global energy supply disruption in recent history.
Elsewhere, Trump said Iran agreed to suspend its nuclear program indefinitely and will not receive any frozen funds from the US.
Macquarie said while news feeds seem to suggest a "quid-pro-quo" of unfreezing $20 billion in exchange for enriched uranium, it is doubtful that Iran will forego its main levers, including closure of Hormuz.