WASHINGTON (dpa-AFX) - Snapping two days of gains, crude oil went into a tailspin on Friday after Iran reopened the Strait of Hormuz, a critical sea-route through which 20% of the world's oil transit takes place, thereby easing supply-related concerns.
WTI Crude Oil for May month delivery was last seen trading down by $11.17 (or 10.58%) at $84.11 per barrel.
Since the U.S.-Israel versus Iran war began on February 28, Iran effectively closed the Strait of Hormuz, crippling oil exports from Arab nations and leading to a huge surge in oil prices.
The spike in oil prices led to inflation across major economies. Economists warned of 'demand destruction' if oil prices continued to rise.
Last week, U.S. President Donald Trump announced a two-week ceasefire and demanded Iran open the Hormuz strait.
In a significant development impacting oil prices, Iran's Foreign Minister Abbas Araghchi today declared that the passage for all commercial vessels through Strait of Hormuz is completely open for the remaining ceasefire period.
Through Truth Social, Trump confirmed the reopening. However, Trump insisted that the naval blockade enforced by U.S. forces on all ships transiting to and from Iranian ports will continue until the U.S. transaction with Iran is 100% complete.
Notably, after the announcement, Shalamar, a Pakistani-owned crude oil tanker, was the first to ship crude oil out of the strait.
Since the attacks on Iran by U.S.-Israeli forces began on February 28, oil prices have been going 'up north,' rattling global energy markets.
Iran retaliated by counterattacks on Israel and some of its neighbors who harbored U.S. forces as well as by closing the Strait of Hormuz, a crucial chokepoint for Arab oil exports to the rest of the world.
Global economies were hit harder due to consequent inflationary concerns and major central banks retreated from any moves for lowering interest rates.
During this period of two-week ceasefire, U.S. and Iranian delegates met in Pakistan to discuss on the ways to end the crisis permanently. However, the talks collapsed.
Two days before, Trump confirmed a second round of talks.
Hinting that the talks may happen over this weekend, in a telephone interview with Bloomberg, Trump stated that Iran agreed to suspend its nuclear program indefinitely and added that it will not receive any frozen funds from the U.S.
Iran has not responded to Trump's remarks so far.
Despite Trump calling the war 'very close to an end' a couple of times, experts are cautious in accepting it.
While Trump wants Iran to give up its nuclear programs forever, Iranian hardliners have been rejecting it, asserting Iran's independence in choosing its energy plans.
Though the reconciliation is set to last until April 22 when the ceasefire ends, the reopening of the waterway calmed the markets.
Meanwhile, following the first direct negotiations after several years between Israel and Lebanon, a 10-day ceasefire was announced by Trump. The U.S.-hosted negotiations were mediated by U.S. Secretary of State Marco Rubio.
Lebanon's President Joseph Aoun described the talks as 'delicate and crucial.'
In an interview with Swiss newspaper, Neue Zürcher Zeitung, the executive director of the Paris-based International Energy Agency remarked that it would take nearly two years for the gulf to reach pre-war-level output again.
Recent data from OPEC showed that while OPEC+ production slumped by 9.40 million barrels per day in March compared to February, non-OPEC+ supply fell by 770,000 bpd.
The U.S. dollar index was last seen trading at 98.00, down by 0.21 points (or 0.21%) today.
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