dailyloe.com – Oil prices tumbled sharply on Friday following geopolitical developments in the Middle East. The drop came after Iran declared a key shipping lane open and a ceasefire began between Israel and Lebanon. U.S. President Donald Trump also stated the conflict in Iran should end soon. These events raised hopes for reduced supply disruptions in the oil market.
Iranian Foreign Minister Seyed Abbas Araghchi declared the Strait of Hormuz completely open. He made the statement on the social media platform X. This followed the start of a ceasefire between Israel and Lebanon. The truce began at 5 p.m. ET on Thursday and is set to last for ten days.
U.S. crude oil futures for May delivery fell 10.6 percent to $84.63 per barrel. The international benchmark Brent crude for June delivery tumbled 9.9 percent. It settled at $89.50 per barrel. The price drop reflected market optimism about supply.
In his social media post, Araghchi outlined conditions for vessels. He said ships must sail a coordinated route prescribed by Iranian maritime authorities. The Strait of Hormuz is a critical global oil shipping waterway. Its status directly impacts global supply chains.
Israel has been conducting strikes against Lebanon. This military campaign targets Hezbollah, a militant group allied with Iran. The conflict between these groups has hampered U.S. negotiations with Iran. The new ceasefire aims to pause these hostilities.
U.S. President Donald Trump commented on the situation late Thursday. He said the war in Iran should be ending pretty soon. That conflict began on February 28. Trump made his remarks on the Truth Social platform.
Trump also said Israeli Prime Minister Benjamin Netanyahu would be invited to the White House. Lebanese President Joseph Aoun would also receive an invitation. Trump described this as the first meaningful talks between the countries since 1983. The goal is to foster dialogue.
The U.S. State Department commented on the diplomatic efforts. It said both sides aim to create conditions for lasting peace. This includes mutual recognition of sovereignty between Israel and Lebanon. The department noted shared concerns over armed groups.
The State Department effort includes improved border security measures. It also reaffirmed Israel’s right to self-defense. The department noted concerns about non-state armed groups undermining Lebanon’s sovereignty. Trump said he expects Lebanon to take care of Hezbollah.
These developments raised hopes for a broader regional resolution. Analysts at ING said oil prices were drifting lower on specific expectations. The market expects the U.S. and Iran could extend their ceasefire by another two weeks. They might also resume talks to end the conflict.
However, ING analysts issued a note of caution about the physical oil market. They said the market is becoming tighter every day without a restart of flows. This refers to oil moving through the Strait of Hormuz. Supply remains constrained despite diplomatic progress.
ING provided estimates on the scale of the supply disruption. The firm estimates roughly 13 million barrels per day of supply has been disrupted. This accounts for pipeline rerouting and limited tanker movements. The figure could rise further under a U.S. blockade.[]
Source: CNBC
