Global financial markets staged a sharp reversal on Friday as easing geopolitical tensions around the Middle East triggered a broad relief rally across equities and a steep sell-off in crude oil prices. The catalyst was a statement from Iran indicating that the Strait of Hormuz would remain “completely open” for commercial shipping during the ongoing ceasefire period—an announcement that immediately calmed fears of a prolonged disruption to one of the world’s most critical energy corridors.
The development sent benchmark oil prices tumbling. Brent crude fell by 13% to $86.30 per barrel, while West Texas Intermediate (WTI) dropped by the same margin to $79.20. Both benchmarks hit their lowest levels since early March, unwinding a significant portion of the geopolitical risk premium that had built up during recent hostilities.
The reassurance came via Iranian Foreign Minister Seyed Abbas Araghchi, who stated on social media platform X that, in line with the ceasefire arrangements, commercial passage through the Strait of Hormuz would remain fully open for the duration of the truce. The strait is a vital artery for global energy flows, with a substantial share of the world’s seaborne oil transiting through its narrow waters.
Markets interpreted the announcement as a meaningful de-escalation. In Washington, former U.S. President Donald Trump confirmed that Israel and Lebanon had agreed to a 10-day ceasefire, adding further momentum to risk sentiment. He also posted that Iran had declared the Strait of Hormuz open for full passage, while noting that U.S. naval operations tied to the broader transaction process with Iran would continue until negotiations are fully completed.
Equities surge as risk appetite returns
Wall Street responded with a powerful rally. The Dow Jones Industrial Average jumped 1,032 points, or 2.1%, fully recovering losses accumulated since the escalation of the Iran-related conflict. The S&P 500 rose 1.3%, while the Nasdaq Composite gained 1.6%, extending its recovery streak after already reclaiming war-driven losses earlier in the week.
The technology-heavy Nasdaq has now risen for 12 consecutive trading sessions, marking its longest winning streak since 2009. A further advance would push it into territory not seen since 1992.
Investor sentiment has been buoyed throughout the month by a combination of diplomatic progress and easing energy pressures. Since its recent low on March 30, the S&P 500 has surged more than 12%, reflecting one of the strongest short-term rebounds in recent memory.
Oil relief drives bond and equity optimism
The easing of supply disruption fears also rippled through the bond market. Treasury yields declined as investors priced in lower inflation risks tied to falling energy costs and improved global trade stability.
Still, analysts cautioned against interpreting the move as a definitive resolution. Doug Beath, global equity strategist at Wells Fargo Investment Institute, noted that while short-term sentiment is heavily influenced by the free flow of oil, underlying geopolitical risks remain unresolved. “Everything still depends on how the negotiations continue,” he warned.
Strait of Hormuz remains a strategic pressure point
The Strait of Hormuz, one of the most strategically important chokepoints in global energy trade, has been at the centre of market anxiety throughout the conflict. Any disruption in the waterway—through which a significant portion of the world’s oil supply passes—typically triggers immediate volatility in energy markets and global equities.
Friday’s announcement that the passage would remain open, even temporarily, was enough to prompt rapid repositioning across asset classes, with traders unwinding safe-haven bets and rotating back into risk assets.
Still elevated from pre-conflict levels
Despite the sharp decline, oil prices remain above pre-conflict levels. Brent crude continues to trade well above its earlier benchmark of around $73 per barrel, while WTI is still elevated compared with its prior $67 range. This suggests that while immediate fears have eased, markets are still pricing in a degree of geopolitical uncertainty.
The overall tone across markets remains cautiously optimistic—driven by de-escalation signals, but tempered by the recognition that the durability of the ceasefire and diplomatic progress will ultimately determine whether the current relief rally holds.