Oil prices crash nearly 10% after Iran says Strait of Hormuz completely open during ceasefire

Oil prices tumbled sharply on Friday after Iran signalled that the Strait of Hormuz remains open to global shipping, easing fears of supply disruption during the ongoing US-Iran ceasefire. Iran's Foreign Minister Abbas Araghchi said the key maritime route was completely open for commercial tankers and cargo vessels.Brent crude dropped nearly 10% to $89.11 a barrel, extending earlier losses of about 5% driven by optimism around a potential US-Iran agreement. US benchmark West Texas Intermediate (WTI) fell even more sharply, sliding 11% to $84.11 a barrel.Sentiment was also influenced by remarks from former US President Donald Trump, who said Iran had indicated it would refrain from pursuing nuclear weapons for over two decades. "We’re very close to making a deal with Iran," he had earlier said.Geopolitical developments in the Middle East have further shaped market expectations. A temporary easing of tensions between Israel and Lebanon, including a 10-day ceasefire that came into effect at midnight Friday, has reduced immediate risks to regional stability. The truce pauses clashes between Israeli forces and Hezbollah and removes a key hurdle in broader diplomatic efforts involving the US and Iran.The situation in Lebanon had earlier complicated negotiations, with Iran insisting that any agreement must account for ongoing hostilities involving Israel and Hezbollah. The latest ceasefire, confirmed by officials on both sides and backed by US diplomatic efforts, is now seen as a step toward stabilising the region.Despite the sharp correction, analysts caution that oil prices are unlikely to stabilise quickly. Market participants expect continued volatility, with WTI likely to trade in a broad range of $80 to $100 until a formal agreement is reached and shipping activity fully normalises.Brokerage firm Macquarie noted that even with easing tensions, crude prices may remain supported in the $85 to $90 range in the near term, with a potential upside toward $110 as flows through the Strait of Hormuz stabilise. However, it warned that prolonged disruptions could still push Brent prices as high as $150 per barrel.Analysts broadly believe that crude markets may be transitioning into a structurally higher price phase. While the ceasefire offers temporary relief, a return to pre-conflict price levels of $70 to $75 could take time.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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