Oil Prices Plunge Amidst Middle East Ceasefire Developments

Oil prices fell significantly due to Iran's statement on open passage through the Strait of Hormuz during the ceasefire. The market is influenced by possible U.S.-Iran talks and ceasefires in the Middle East. Despite this, a military blockade remains, and European markets are expected to stay tight.

Oil prices experienced a sharp decline on Friday, dropping by about 11% as Iran's foreign minister announced that commercial vessels could pass through the Strait of Hormuz amidst a temporary ceasefire. Brent crude futures plunged $10.59 to $88.80 per barrel, hitting session lows not seen since March 11.

Analysts, including UBS's Giovanni Staunovo, noted that de-escalation signs could boost tanker traffic through the Strait, though the market was also reacting to potential U.S.-Iran negotiations and a Middle East ceasefire being observed. Hopes rose as U.S. President Donald Trump indicated progress in the negotiations with Iran.

Despite the opening of the Strait, military blockades remain active. Analyst Ole Hvalbye emphasized that European markets may continue to face supply constraints, as the journey from the Gulf to Rotterdam takes approximately 21 days. This development has cast uncertainty on future oil price movements.

(With inputs from agencies.)