Oil prices fall more than 10% after Iran says Strait of Hormuz opens during ceasefire
Former US Special Representative for Iran Brian Hook and Fox News contributor Marc Thiessen discuss the fate of Iran’s economy on ‘Kudlow.’
Oil prices fell more than 10% on Friday after Iran’s foreign minister said the Strait of Hormuz would be open to all commercial vessels during a ceasefire between Israel and Lebanon.
West Texas Intermediate crude prices fell more than 10% to below $85 a barrel, while Brent crude oil prices fell more than 10% to around $89 a barrel.
The drop in oil prices comes after Iranian Foreign Minister Abbas Araghchi said the Strait of Hormuz is open to all commercial ships during the remaining 10 days of the ceasefire between Israel and Lebanon. The ceasefire began on Thursday, and the President Donald Trump he told reporters that the ceasefire would include Iran-backed Hezbollah.
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The war in Iran has caused shipping to slow down, causing a shock to oil prices. (Giuseppe Cacace/AFP via Getty Images)
Trump said in a post on his Truth Social platform that the Strait of Hormuz “is FULLY OPEN AND READY FOR BUSINESS AND FULL PASSAGE, BUT THE NAVAL BLOCKADE WILL REMAIN IN FULL STRENGTH AND EFFECT AS IT CONTINUES WITH IRAN, ONLY, UNTIL THE PROPER TIME OF THE 100TH TIME.”
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Oil prices have risen above $100 a barrel since then The war in Iran started a month and a half ago, WTI prices rose to around $113 a barrel on April 6 and Brent crude prices reached more than $119 a barrel on March 30.
Brian Therien, senior investment strategist at Edward Jones, noted that, “Although the US restrictions on Iranian ports are still in effect, oil futures markets are also retreating, which now means that crude prices may return to the $70s by the end of the year.
Oil tankers pass through the Strait of Hormuz, Dec. 21, 2018. (Reuters/Hamad I Mohammed/Reuters)
The oil price shock came after the Strait of Hormuz was effectively closed to commercial shipping amid the conflict due to the threat of Iranian attacks and mines.
The Strait of Hormuz is the main connecting point between the Persian Gulf and the Arabian Sea, about one-fifth of the world. oil and liquefied natural gas you go through the road to places around the world.
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About 20 percent of the world’s oil flows through the Strait of Hormuz off the coast of Iran. (Fox Stories)
A senior Iranian official told Reuters that ships passing through the strait during the ceasefire will travel through designated routes that Iran has deemed safe for navigation, while naval vessels will be removed from the route.
Shipping companies have expressed the need for more information on the announcement before they can resume normal operations on the issue.
German shipping company Hapag-Lloyd said it was avoiding going through the wreckage while it assessed the announcement, although it could start sailing soon.
The US Navy plans to continue its blockade of Iranian ports while the Strait of Hormuz is opened, Trump said. (US Navy / Handout)
Knut Arild Hareide, CEO of the Norwegian Shipowners’ Association, told Reuters that if the announcement “represents a step towards openness, it is a welcome development.”
“However, this situation is not yet resolved, there are many uncertainties that exist, including questions related to the presence of sea mines, the active conditions of Iran, and the practical use,” said Hareide. The Norwegian group represents 130 companies with around 1,500 vessels operating worldwide.
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The International Monetary Fund lowered its outlook for global economic growth this week due to the shipping disruptions, with emerging markets and developing economies taking a bigger hit than advanced economies due to the conflict.
Reuters contributed to this report.
