Oil prices plunge 10% after Iran says Strait of Hormuz is open for commercial vessels

The price of oil plunged sharply and U.S. stock indexes opened at new all-time highs after the Iranian foreign minister said that the Strait of Hormuz was open for commercial vessels.

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“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,” Seyed Abbas Araghchi wrote in a post on X.

U.S. crude oil plunged 10% to nearly $85 per barrel, while international Brent crude also slid more than 8% to around $90 per barrel.

Heating oil futures, which are a proxy for jet fuel, plummeted 13%. Wholesale RBOB gas futures also fell 7%.

It was not immediately clear if the reference to a “coordinated route,” meant that ships would need to pay a toll to Iran, as some have reportedly done in recent weeks. It was also not immediately clear if ships in the region, which have been threatened and attacked, would trust this announcement.

Shortly after the Iranian minister’s post, President Donald Trump celebrated the news with his own post on Truth Social, which read: “IRAN HAS JUST ANNOUNCED THAT THE STRAIT OF IRAN IS FULLY OPEN AND READY FOR FULL PASSAGE. THANK YOU!”

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However, Trump, in a second post, said that “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.”

GasBuddy analyst Patrick De Haan wrote on X that the shift in oil prices could quickly translate to lower gas prices.

“This could accelerate sending fuel prices lower starting this weekend with the national average likely falling below $4/gal to perhaps $3.65-$3.85,” De Haan wrote.

As of Friday morning, the average price per gallon was $4.09, according to AAA, and has been declining a few cents each day this week.

At the opening bell, the S&P 500 rose 0.6% and the Nasdaq Composite jumped 1%. Both set new all-time highs in early trading as a result.

The Dow immediately jumped more than 500 points and the Russell 2000 index rose 1.4%

U.S. Treasury yields also moved sharply lower. The yield on the 10-year U.S. government bond fell to 4.23%, its lowest level since March 18.

Stocks across Europe also rallied higher on the Iranian minister’s announcement, with the Stoxx 600 index rising 1.2%, and flagship indexes in France and Germany jumping more than 2%. Stocks in the U.K. and Italy rose around 1%.