LONDON: Oil prices have plunged by about 9 per cent on Friday, extending previous losses, after Iran’s foreign minister said that the passage for all commercial vessels through the Strait of Hormuz is now open for the remaining ceasefire period, in line with that in Lebanon, Reuters reported.
Brent crude futures have dropped by $8.46, or 8.5pc, to $90.93 a barrel at 1300 GMT.
US West Texas Intermediate crude futures have dropped $8.87, or 9.4pc, to $85.82 a barrel.
The development came after Iranian Foreign Minister Seyed Abbas Araghchi said the passage for all commercial vessels through the Strait of Hormuz is declared “completely open”.
In a post on X today, the Foreign Minister wrote that in line with the ceasefire in Lebanon, the Strait of Hormuz is completely open for the remaining period of the ceasefire.
The passage of vessels through the strait will be on the coordinated route as already announced by the Ports and Maritime Organisation of Iran, Araghchi added.
Moreover, stock markets surged in response to the latest news, with the FTSE 100 index jumping more than 70 points at one stage before paring back gains to stand 0.5% or 52.48 points up at 10642.47.
In Europe, the Dax in Germany surged 1.9%, and France’s Cac 40 was 2% higher, while stocks on Wall Street opened with steep gains.
The Dow Jones Industrial Average leaped 1.6% higher in early trading in the US.
Kathleen Brooks, research director at XTB, said: “This is the biggest development so far during the ceasefire, and it gives hope that the war will end soon, and supply chains will return to some normality.
“While it will take some time to relieve the backlog of tankers travelling through the Strait of Hormuz, and for Gulf commodity supplies to return to normal after damage caused by Iranian drones, this is undoubtedly good news, and it brightens the outlook for the global economy for the rest of this year.”
BP and Shell dropped 8% and 6% respectively, while energy firm SSE was 8% lower and British Gas owner Centrica fell by 7%.
But airlines were enjoying better fortunes on the prospect of jet fuel supply relief, with British Airways owner International Consolidated Airlines 6% higher in the FTSE 100, while Wizz Air and easyJet led the FTSE 250 gains, ahead 9% and 8% respectively.
