Oil prices plunged more than 10% on Friday after Iran announced that the Strait of Hormuz would remain “completely open” for the rest of the ceasefire with the United States, sending stock markets surging.

Iran’s Foreign Minister Abbas Araghchi said on X that “passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire”.

The strategic waterway, through which one-fifth of the world’s crude oil normally flows, has been disrupted by Iran since the US-Israeli offensive began. The disruption had sent oil prices to a peak of nearly $120 per barrel and threatened to disrupt the global economy.

Both the benchmark international contract Brent and its US equivalent WTI fell below $90 per barrel following the announcement.

Wall Street’s main stock indices jumped at the opening bell, with both the S&P 500 and the Nasdaq Composite building on record highs struck the previous evening.

“This news is having an immediate impact on markets,” said Kathleen Brooks, research director at XTB. “This is the biggest development so far during the ceasefire, and it gives hope that the war will end soon, and supply chains will return to some normality.”

It remained unclear whether Araghchi was referring to the 10-day truce agreed by Lebanon and Israel that went into effect at midnight or an earlier two-week truce between Iran and the United States that began on 8 April.

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The declaration boosted hopes for further peace talks and a renewal of the ceasefire, despite US President Donald Trump saying that the US blockade of Iran’s ports remains in force.

French President Emmanuel Macron and UK Prime Minister Keir Starmer were chairing a meeting of allies Friday to consider sending a multinational force to ensure free-flowing trade in the Strait of Hormuz once the conflict ends.

David Morrison at Trade Nation noted that the speed and magnitude of the S&P 500’s rebound – nearly 12% in just over two weeks – was reinforcing the rally.

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“The sharpness of the move has caught many investors offside, particularly those who sold during the first few weeks of the war, either to flatten their exposure or go net short,” he said.

“Now these investors are having to pay up to re-establish their existing positions, or cover their shorts and suffer painful losses.”

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Morrison said the “fear of missing out” effect had returned as stock indices moved into record territory, particularly as the first-quarter reporting season showed strong earnings growth.

European stocks were higher in afternoon trading, with both Frankfurt and Paris gaining 2%.

Asian stock markets mostly closed lower, with Tokyo among the biggest losers after reaching a record high Thursday. Taiwan’s TAIEX index dropped after hitting a market capitalisation of $4.14 trillion.

The performance put the index ahead of London’s benchmark FTSE 100 and made the TAIEX the world’s seventh-biggest index by value, according to Bloomberg data.

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