Oil Prices Plunge as Strait of Hormuz Reopens to Commercial Traffic

Global energy markets experienced a significant correction on Friday as the Strait of Hormuz reopened for commercial shipping, triggering a sell-off in crude oil futures and major energy stocks. The reopening comes amid a ceasefire in Lebanon and conflicting statements from Iranian and U.S. officials regarding the nature of the agreement. Iranian Foreign Minister Seyed Abbas Araghchi confirmed that the waterway is now open to all commercial vessels for the duration of the ceasefire in Lebanon. While President Trump confirmed the reopening and noted that Iran is in the process of removing mines, he clarified that these actions are not tied to the Lebanon truce and that the U.S. blockade on Iranian ships remains in effect. The market reaction was immediate and severe. WTI crude oil plummeted more than 13% to $82 per barrel, while Brent crude, the international benchmark, fell 12% to drop below $88 per barrel. This represents a sharp reversal from recent peaks where Brent had approached $110 per barrel. The drop in commodity prices hit energy giants hard; Chevron (CVX) shares fell 7% as investors began pricing in a lower-price environment and questioned the valuation of energy stocks with high earnings multiples. Conversely, the broader market reacted positively to the reduced geopolitical risk, with the S&P 500 rising 1.2% by mid-morning trading.