Oil prices plunge following full reopening of the Strait of Hormuz to commercial vessels
Oil prices plunged on Apr. 17, as geopolitical tensions in the Middle East showed signs of easing, following the full reopening of the Strait of Hormuz to commercial vessels.
Global crude markets reacted sharply after Iran confirmed that the Strait of Hormuz is now “completely open” to commercial shipping during an ongoing ceasefire tied to regional conflict negotiations. The announcement marked a major turning point after weeks of disruption that had severely constrained global oil flows.
Brent crude fell by more than 10%, dropping to around $88–89/bbl, while US West Texas Intermediate (WTI) declined to the low $80s—both benchmarks hitting their lowest levels in over a month. The sell-off reflects a rapid unwinding of the geopolitical risk premium that had built up during the conflict.
The reopening follows a fragile, 10-day ceasefire involving Israel and Lebanon, alongside tentative progress in US–Iran negotiations. While the waterway is now open, the US has maintained a naval blockade on Iranian ports, signaling that broader geopolitical risks have not fully dissipated.
The return of tanker traffic through the Gulf could gradually restore millions of barrels per day to global markets, easing the tight conditions that had driven recent price volatility. However, some uncertainty remains over how quickly shipping activity will normalize and whether the ceasefire will hold.
Despite the sharp price decline, the oil market remains structurally fragile. Weeks of disruption have depleted inventories and altered trade flows, and it may take time for supply chains to fully recover. Additionally, any breakdown in ceasefire talks could quickly reverse the current trend.
Beyond energy markets, the development rippled across global financial systems. Equity markets surged, with major US indices posting strong gains as lower oil prices reduced inflation concerns and improved economic sentiment. At the same time, expectations for monetary policy shifted, with traders increasingly betting that easing energy costs could allow central banks—particularly the Federal Reserve—to consider rate cuts later this year.
About the Author
Conglin Xu
Managing Editor-Economics
Conglin Xu, Managing Editor-Economics, covers worldwide oil and gas market developments and macroeconomic factors, conducts analytical economic and financial research, generates estimates and forecasts, and compiles production and reserves statistics for Oil & Gas Journal. She joined OGJ in 2012 as Senior Economics Editor.
Xu holds a PhD in International Economics from the University of California at Santa Cruz. She was a Short-term Consultant at the World Bank and Summer Intern at the International Monetary Fund.