Oil Prices Retreat as Iran Reopens Strait of Hormuz Amid Cease-Fire

U.S. oil prices experienced a sharp decline on Friday morning after Iran's foreign minister announced that the Strait of Hormuz is fully open for all commercial vessel passage. This declaration comes as part of an ongoing cease-fire agreement, easing immediate fears of systemic supply disruptions. The Strait of Hormuz is widely regarded as the world's most critical energy chokepoint, serving as the primary artery for oil exports from the Persian Gulf to global markets. Any threat to the passage of tankers typically triggers a spike in crude prices due to the risk of sudden supply shocks. Following the announcement, benchmarks plunged toward the $80 per barrel mark. The market is reacting to the removal of the geopolitical risk premium that had been pricing in potential closures or hostilities in the region. Traders are now pivoting from crisis-management positioning to a more balanced outlook on global supply. While the cease-fire provides temporary stability, the market remains sensitive to the longevity of the agreement and the stability of regional diplomatic relations.