Oil Prices Plunge 10% After Iran Opens Strait of Hormuz During Lebanon Ceasefire

Oil prices tumbled more than 10% Friday morning after Iran announced the vital Strait of Hormuz shipping lane is "completely open" for commercial vessels during the ongoing Israel-Lebanon ceasefire.

Iran's Foreign Minister Abbas Araghchi said the passage is open for all commercial tankers and cargo ships "for the remaining period of ceasefire, on the coordinated route as already announced." The announcement came as tensions in the Middle East showed signs of cooling.

U.S. stock markets responded immediately, with major indexes opening at new all-time highs as investors welcomed the news. The Strait of Hormuz is one of the world's most important oil shipping routes, with about 20% of global petroleum passing through the narrow waterway between Iran and the Arabian Peninsula.

President Trump welcomed Iran's announcement and has suggested a deal to end broader regional conflicts could be near. The Lebanon ceasefire between Israel and Hezbollah has held for several days, raising hopes for broader regional stability.

The oil price drop signals markets believe the risk of supply disruptions has decreased significantly. Energy traders had been pricing in potential supply shocks if the strait became a conflict zone.