Oil Prices Plunge Over 9% on Strait of Hormuz Ceasefire

Oil prices collapsed in Friday trading and remain sharply lower midday Sunday, driven by a potential diplomatic breakthrough in the US-Iran conflict. West Texas Intermediate crude is trading at $82.59 per barrel, down $8.58 or 9.41 percent from its prior settlement, according to live price data. Brent crude sits at $90.38, down $9.01.

The sell-off was triggered by Iran's announcement that it would reopen the Strait of Hormuz for commercial shipping during a 10-day ceasefire between Israel and Hezbollah, as reported by Rigzone. The waterway is a chokepoint for about a fifth of the world's oil. Iran's Foreign Minister declared the strait "completely open," though analysts noted access may initially be limited to vessels along the Iranian coastline.

"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 the Rigzone report. The closure had ushered in the worst global energy supply disruption in recent history after the conflict began in late February.

For Bakken operators, the sharp drop in the headline WTI price directly impacts the value of their production. The Bakken differential—the discount at which Bakken crude trades versus WTI—is currently -$3.42, according to live data. This means Bakken crude is effectively priced near $79.17 per barrel. The price plunge erases a significant portion of the geopolitical risk premium that had supported prices for weeks, potentially squeezing margins for high-cost producers.

Analysts warn the sell-off may not be over, but volatility remains high. "Expectations that current talks could help set a course toward a complete resolution and a reopening of the Strait of Hormuz could continue to fuel downward pressure on the market," said Paolo Broccardo, CEO at BankPro, in a separate analysis for Rigzone. He added that prices could rebound strongly on any diplomatic setback, noting the physical market remains tight with the strait "severely disrupted."

In a conflicting signal for field operations, the U.S. Energy Information Administration raised its fuel price projections for 2026 and 2027 in its April Short-Term Energy Outlook, citing higher crude oil prices. The EIA now sees diesel averaging $4.80 per gallon in 2026, up from a $4.12 projection in March. Higher diesel costs increase drilling and completion expenses for Bakken operators, even as the crude they sell loses value.

Midstream, the focus will be on tanker movements. By late Friday, at least eight tankers inside the Persian Gulf appeared to be heading towards the strait, according to data in the Rigzone report. A sustained reopening would gradually return Middle Eastern crude to global markets, increasing competition for Bakken barrels.

Natural gas prices showed modest strength, up $0.03 to $2.67, disconnected from the oil move. For now, Bakken operators face a rapidly shifting price landscape where diplomatic headlines are outweighing fundamental supply tightness.