Hormuz Open — Oil Drops

Oil prices plunged over 5% Monday after President Trump and Iran both confirmed the Strait of Hormuz remains open for commercial shipping during their ceasefire. Brent crude dropped to $78.50 per barrel, its lowest in three months. (bloomberg.com) The Strait of Hormuz, a 21-mile-wide waterway between Iran and Oman, handles 20% of global oil flows—about 21 million barrels daily in 2025. Tankers pass single-file through two 2-mile-wide channels, making it a chokepoint vulnerable to blockade. (eia.gov) Trump announced the opening in a Truth Social post at 10:15 a.m. ET, stating U.S. forces verified safe passage for 12 tankers that morning. Iran's Foreign Ministry echoed this 45 minutes later, calling it a "goodwill gesture" amid talks. (truthsocial.com; mfa.ir) WTI crude futures fell 4.8% to $74.20 by 2 p.m. ET, with trading volume spiking 30% above average. Energy stocks like ExxonMobil dropped 2.1%, while airlines such as Delta gained 1.8%. (wsj.com) Tensions peaked two weeks ago when Iran mined the strait after U.S. strikes on its proxies, halting 15% of shipments and driving Brent to $92. A U.S.-brokered ceasefire on April 12 ended active fighting, but Hormuz closure fears lingered. (reuters.com) This drop eases inflation pressures, as oil comprises 40% of U.S. gasoline costs. Consumers could see pump prices fall 15-20 cents per gallon within two weeks, per AAA estimates. (aaa.com) OPEC+ meets Wednesday to discuss output; analysts now expect a 500,000 barrel-per-day cut reversal if flows stabilize. Saudi Aramco shares rose 1.2% in Riyadh on expectations of higher exports. (reuters.com) Iran's statement drew skepticism from Israeli officials, who called it "temporary theater" without full sanction relief. Tehran countered that 18 foreign warships now patrol the strait alongside its navy. (timesofisrael.com; irna.ir) The market's relief rally erased $4 trillion in global energy sector value gained during the flare-up. Traders eye next week's tanker inspections for sustained flow confirmation. (cnbc.com)