-- Global oil benchmarks dipped more than 10% on Friday hitting below $90 after Iranian Finance minister declared the Strait of Hormuz "completely open" for commercial vessels until the end of the ceasefire, in a post on X.
Front-month West Texas Intermediate crude futures declined 10.6% to $84.78 per barrel, while Brent futures plunged 10% to $89.89/bbl.
The Strait of Hormuz is completely open to commercial ships for the remaining period of the ceasefire between Iran and the US, Iran Foreign Minister Seyed Abbas Araghchi said on X. It is scheduled to end on Tuesday.
"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, on the coordinated route as already announced by Ports and Maritime Organisation of the Islamic Rep. of Iran," Araghchi posted.
Trump said on Friday however after Iran's announcement of the for-now temporary reopening that the US was continuing to blockade Iranian ports, preventing ship movements to and from them.
"The Strait of Hormuz is completely open and ready for business and full passage, but the naval blockade will remain in full force and effect as it pertains to Iran, only, until such time as our transaction with Iran is 100% complete," he wrote on Truth Social.
Despite the diplomatic optimism and a new 10-day Israel-Lebanon ceasefire, the International Energy Agency reportedly warned Europe faces a jet fuel collapse within six weeks if Middle East shipping blockades persist.
While rumors of a deal circulate, the Strait of Hormuz closure has caused crude stranded at sea to reach levels higher than pre-war averages.
"Even if diplomatic progress caps headline crude benchmarks in the $95-$100 range, the underlying physical squeeze is extreme," said Robert Rennie Head of Commodity and Carbon Research at Westpac.
"As long as flows through Hormuz remain constrained, real-economy fuel prices are likely to remain under upward pressure," Robert added.