Oil and European natural gas prices tumbled after the promised re-opening of the Strait of Hormuz bolstered sweeping optimism that the US-Iran conflict will reach an end and ease disruptions to global energy markets.
Brent futures retreated 9.1% to settle near $90 a barrel, reversing some of the rally sparked by the US-Iran war, while West Texas Intermediate slumped to roughly $84.
European benchmark gas prices fell as much as 10% to end the day near €39 a megawatt-hour.
Prices plummeted after Iran said it would open the Strait of Hormuz for the duration of a 10-day ceasefire between Israel and Hezbollah in Lebanon.
The waterway, a chokepoint for about a fifth of the world’s oil, is now “completely open” for commercial shipping, Iran’s Foreign Minister Abbas Araghchi posted on X on Friday.
“The market is now pricing that the war and the closure of the Strait is over,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management.
Friday’s moves stoked optimism there may be an end in sight to the seven-week long conflict, which ushered in the worst global energy supply disruption in recent history and has simultaneously stoked fears of broader inflation and a hit to global growth.
