The price of oil and gas on global markets dropped sharply on Friday afternoon after Iran’s foreign minister said in statement that the Strait of Hormuz would be “completely open” to commercial shipping for the duration of the ceasefire in Lebanon.
Brent, the global benchmark oil contract, dropped more than 10% to trade under $90 (€76) per barrel for the first time since early March and European natural gas was under €40/megawatt, the lowest level since the outbreak of hostilities.
US president Donald Trump confirmed the Iranian announcement on his Truth Social network, adding “Thank you!”.
Early stage
While at this early stage it remains unclear how long-lasting the opening will be, the rapid fall in energy prices will be a welcome relief for farmers and fuel users in Ireland who suffered from the recent surge in prices, which were a catalyst for the protests last week.
If the trade route does remain open for an extended period, then analysts estimate it could take months for supply chains to return to normal, as global shipping routes have been severely disrupted over six weeks of the conflict.
There are also concerns over the amount of damage inflicted on infrastructure in the region, particularly at Qatar’s key liquefied natural gas facility.
The progress of peace talks under way between Iran and the US is critical, with the current ceasefire due to expire next week.
The ceasefire agreed between Isreal and Hizbollah on Thursday is for 10 days. Should either of those break down, then a fresh closure of the shipping lane is likely.
SHARING OPTIONS