Oil prices took a nosedive on Friday following a statement from Iran’s foreign minister, who announced the Strait of Hormuz was “completely open” amid a ceasefire between Israel and Lebanon. This development fueled optimism that a significant supply bottleneck might soon be alleviated.

Iranian Foreign Minister Seyed Abbas Araghchi’s comments on the social media platform X came after U.S. President Donald Trump remarked on Thursday evening that the conflict with Iran, which started on February 28, “should be ending pretty soon.”

As a result, U.S. crude oil futures for May delivery dropped almost 12%, closing at $83.85 per barrel. Meanwhile, the international benchmark, Brent crude, for June delivery decreased by 9% to end at $90.38 per barrel.

Araghchi’s social media post also emphasized that vessels navigating the vital passageway must adhere to a “coordinated route” as directed by Iran’s maritime authorities.

Trump responded Friday in a Truth Social post by thanking Iran for opening the strait. He said, however, in a second social media post that a U.S. naval blockade of Iran’s ports will remain in “FULL FORCE” until the U.S. reaches a deal with Iran.

Israel and Lebanon agreed Thursday to a 10-day ceasefire that started at at 5 p.m. ET that evening. Israel has been striking Lebanon in a military campaign against Hezbollah, a militant group that is allied with Iran. The conflict between the groups has hampered U.S. negotiations with Iran.

Trump said in a Truth Social post that Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun would be invited to the White House for what he described as the first meaningful talks between the two countries since 1983. 

The U.S. State Department said both sides aimed to create conditions for lasting peace, including mutual recognition of sovereignty. The department said the effort included improved border security and reaffirmed Israel’s right to self-defense.

It also noted shared concerns over nonstate armed groups from undermining Lebanon’s sovereignty. 

Trump said he expects Lebanon to “take care of Hezbollah.” The developments raised hopes of a broader resolution to the Middle East conflict.

Oil prices began drifting lower on expectations that the U.S. and Iran could extend their ceasefire by another two weeks and potentially resume talks to end the conflict, ING said. 

“However, the physical market is becoming tighter every day that passes without a restart of oil flows through the Strait of Hormuz,” ING analysts said in a note.

Even accounting for pipeline rerouting and limited tanker movements, ING estimates roughly 13 million barrels per day of supply has been disrupted, a figure that could rise further under a U.S. blockade. 

“The key upside risk for the market is that peace talks between the US and Iran break down. This isn’t an unrealistic scenario, given that US and Iranian demands remain fairly wide apart.”