Oil plunges, markets rally

Oil prices fell by more than 10% on April 17 after Iran said the Strait of Hormuz was open to commercial shipping during the ceasefire. (brecorder.com) Reuters reported Brent crude dropped $11.12, or 11.2%, to $88.27 a barrel, while U.S. crude also tumbled as traders priced out some near-term supply risk. Iran’s foreign minister, Abbas Araghchi, said the passage was open for “all commercial vessels” for the rest of the truce period. (brecorder.com) The Strait of Hormuz is the narrow waterway between the Persian Gulf and the Arabian Sea that carries about one-fifth of the world’s oil and liquefied natural gas trade. When traffic through it looks threatened, oil usually rises because buyers expect shortages and higher shipping costs. (foxbusiness.com) Friday’s move reversed part of that fear trade. Bloomberg reported Brent fell to about $88 in London and West Texas Intermediate slid to around $84 in New York after Araghchi said the strait was “completely open,” even as a U.S. naval blockade still constrained some flows. (bloomberg.com) Stocks rose with oil falling. In India, the Nifty 50 closed at 24,354 on April 17, up 156.8 points, or 0.65%, while the Sensex gained 504.86 points to 78,494, according to market data and local market reports. (tradingeconomics.com) (timesofindia.indiatimes.com) That reaction fits India’s energy exposure. India imports most of its crude, so lower oil prices can ease pressure on inflation, the rupee and the import bill, which is why oil shocks have hit Indian equities repeatedly during the recent Middle East escalation. (economictimes.indiatimes.com) (firstpost.com) The tanker trade is more complicated. Frontline and Nordic American Tankers had already rallied this year as disruption around Hormuz pushed up charter rates and forced longer routes, a setup that can help shipowners even when broader markets are under stress. (finviz.com) (247wallst.com) On April 17, Google Finance showed Frontline trading at $37.30 and Nordic American Tankers at $6.10 in morning U.S. trading, with both names still near levels that reflected months of elevated tanker demand. (google.com) The immediate question is whether open-water assurances turn into normal traffic. The New York Times reported April 17 that the strait was open for commercial ships after the Lebanon ceasefire agreement, but the U.S. blockade on Iran remained in place, leaving traders to judge how much of the supply system is actually back to normal. (nytimes.com)