Iran’s Revolutionary Guards say Strait of Hormuz may reopen, sending oil and gas prices lower

Oil is dropping because the market heard one thing it desperately wanted to hear — that the Strait of Hormuz might not stay choked off. An account linked to Iran’s Revolutionary Guards Navy said on Thursday, May 7, that safe passage through the strait would be ensured after the “aggressor’s threats” were neutralized. That was enough to knock energy prices lower. But the move matters less as a promise than as a signal that Tehran may be testing a de-escalation path. ### Why does Hormuz matter so much? The Strait of Hormuz is the narrow exit from the Persian Gulf. Before this crisis, about one-fifth of the world’s oil and gas moved through it. That is why even a partial disruption hits prices everywhere — crude, shipping, insurance, and eventually fuel and food. The waterway is only about 39 kilometers wide at its narrowest point, so there is very little room for error. ### What exactly changed today? The new piece was the IRGC-linked message saying passage would be “safe and stable.” Donald Trump also said the war would end and the strait would reopen if Iran accepted what had been discussed in negotiations. Put those together, and traders read it as a fresh sign that both sides are at least talking about a workable off-ramp. ### Why did prices fall so quickly? Because oil had a lot of fear premium baked in. Earlier this week, Brent was still above $109 after attacks on the UAE and clashes around the strait rattled traders. Once the market started believing the ceasefire might hold and shipping could resume, that premium started coming out fast. Reuters described oil as nursing steep losses as traders embraced the prospect of a peace deal. ### Was the strait actually closed? Basically, yes — or close enough that it had the same effect. Shipping through the corridor collapsed from roughly 150 vessels a day before the conflict to just four or five that Iran considered non-hostile. The IMO said about 2,000 ships and 20,000 seafarers were stranded in the Gulf. So even before any formal “reopening,” the damage to trade flows was already huge. ### Didn’t the U.S. already try to reopen it? Yes. Washington launched “Project Freedom” to guide commercial vessels through the strait. U.S. officials said two American-flagged merchant ships got through, and Maersk said its Alliance Fairfax completed a transit under U.S. military protection. That showed passage was possible. But it did not mean normal commercial traffic had returned. ### So is this a real reopening? Not yet. The catch is that a political signal is not the same thing as a functioning trade lane. Shipowners still need confidence that mines are cleared, escorts are available, insurers will cover voyages, and neither side will treat the next transit as a provocation. That is an inference from the shipping and security picture — but it is the practical hurdle that matters now. ### Why are markets treating this cautiously? Because this story has reversed before. The ceasefire has held just enough to prevent a full restart of major combat, but attacks on the UAE and naval clashes showed how fragile that is. Traders are pricing a lower chance of worst-case disruption, not declaring the crisis over. Today’s drop in oil and gas prices is the market saying the worst-case Hormuz scenario looks a little less likely. But one IRGC-linked statement does not reopen a chokepoint by itself. The real test is whether ships start moving at scale — and keep moving.