Crude collapsed 9% as Iran conditionally reopens Hormuz transit despite lingering US blockade

Crude futures collapsed in Friday trading, shedding approximately 9% to 11% as Iran officially declared the Strait of Hormuz open to commercial vessels for the remainder of the ceasefire period. This definitive logistical pivot triggered a massive unwinding of the geopolitical risk premium, abruptly shifting speculative focus from supply disruption to the normalisation of physical flows.

The international Brent contract plummeted $9.01 (9.07%) to settle at $90.38 a barrel, while US WTI crude freefell $10.48 (11.45%) to close at $83.85.

Both benchmarks recorded their steepest daily declines since the initial ceasefire announcement on April 8, aggressively pricing in the diplomatic progress surrounding a preliminary memorandum of understanding.

Despite the severe paper selloff, the resumption of physical transit remains highly conditional. Iranian authorities mandate that all maritime movement must be coordinated directly with the Islamic Revolutionary Guard Corps (IRGC), reportedly contingent upon the unfreezing of state assets. Initial vessel tracking confirms approximately 20 ships are actively navigating toward the Gulf exit, signalling the first tangible movement of stranded Middle Eastern barrels.

Structural frictions continue to cap immediate downstream relief. A US military blockade comprising 10,000 personnel remains actively deployed, introducing persistent operational complexities. Furthermore, the inherent 21-day shipping voyage from the Gulf to major European hubs like Rotterdam ensures that prompt-market physical availability will remain tightly constrained, severely lagging the rapid depreciation of forward paper valuations.

Written by: Aiman Haikal