Crude Prices Plunge on Strait of Hormuz Ceasefire News

Oil prices collapsed in Friday trading following Iran's announcement that it would reopen the Strait of Hormuz, a critical chokepoint for global crude shipments, according to live market data and reports from Rigzone. West Texas Intermediate (WTI) crude settled at approximately $84, a drop of 9.1% for the session. As of midday Saturday, WTI is trading at $82.59, down $8.58 or 9.41% from its prior settlement. Brent crude is at $90.38.

The sharp decline was triggered by a statement from Iran's Foreign Minister Abbas Araghchi on Friday that the strait is "completely open" for commercial shipping during a 10-day ceasefire between Israel and Hezbollah, Rigzone reported. The Strait of Hormuz typically handles about a fifth of the world's oil supply, and its closure over a seven-week US-Iran conflict had caused severe global supply disruptions.

"The market is now pricing that the war and the closure of the Strait is over," said Arne Lohmann Rasmussen, chief analyst at Global Risk Management, in a report cited by Rigzone. However, he cautioned that the opening may only apply to vessels along the Iranian coastline. The news spurred a massive liquidation of bullish bets, with one data group showing net-long positions in Brent crude falling from 82% to 27% in a single session.

For Bakken operators, the price drop directly pressures wellhead revenues. The live data shows the Bakken crude differential at a discount of $3.42 per barrel versus WTI, meaning Bakken crude is priced around $79.17. This sudden erosion in the benchmark price, if sustained, could challenge the economics of marginal wells and potentially slow the pace of new drilling activity in North Dakota.

Analysts warned that prices could remain volatile. "Expectations that current talks could help set a course toward a complete resolution... could continue to fuel downward pressure on the market," said Paolo Broccardo, CEO at BankPro, in a Rigzone analysis. He added that any setback in diplomacy could trigger a sharp rebound, as the physical market remains tight.

The price collapse occurs alongside revised higher fuel price forecasts from the U.S. Energy Information Administration (EIA). In its April Short-Term Energy Outlook, the EIA raised its 2026 and 2027 projections for gasoline and diesel, citing higher crude oil prices as the primary driver, Rigzone reported. The agency forecast the U.S. regular gasoline retail price to average $3.70 per gallon in 2026 and diesel to average $4.80 per gallon.

While the immediate geopolitical risk premium has unwound, underlying market fundamentals provide some support. "Despite easing geopolitical pressure, downside remains limited by resilient demand conditions," said Naeem Aslam, CIO at Zaye Capital Markets, in a separate Rigzone report. Analysts at BMI noted that severe strains in the physical market persist despite the drop in futures prices.