U.S. energy equities declined sharply on Friday after Iran announced the Strait of Hormuz was "completely open" to commercial vessels, triggering a drop in global oil prices.
Energy giants saw significant losses: Chevron shares slid almost 4.5%, Exxon Mobil fell 5%, Occidental Petroleum dropped 6%, and Valero Energy plunged nearly 7%.
Brent crude slipped below $90 a barrel following a social media communication attributed to Iran's foreign minister, Seyed Abbas Araghchi, saying that passage through the Strait of Hormuz was open for commercial shipping. The post also stated that vessels must transit via a "coordinated route" issued by Iran's maritime authorities.
The announcement follows a period in which U.S. energy stocks had advanced, driven by the earlier blockade of the Strait of Hormuz that lifted oil prices and tightened supplies of crude and other energy fuels. That disruption had supported demand for energy equities amid higher commodity prices.
The reopening declaration was tied to a ceasefire arrangement. According to material in the public domain, former U.S. President Trump agreed to a two-week ceasefire on April 7 in return for Iran fully opening the Strait. Despite that agreement, Iran's parliamentary speaker, Mohammad Bagher Ghalibaf, accused the United States of breaching the terms by permitting Israel to continue operations in Lebanon.
Throughout the U.S.-Iran ceasefire period the strait remained largely closed in practice, with only a small number of commercial vessels transiting the waterway each day as the two countries disputed aspects of the accord. The latest statement from Iran signals a shift back toward normal commercial traffic, albeit with the requirement that ships follow routes coordinated by Iran's maritime authorities.
Market participants reacted quickly to the reduced prospect of extended disruption in the shipping lane, which had been a central factor supporting elevated oil prices and the recent run-up in U.S. energy stocks. The move lower in Brent and the sell-off in major oil company shares illustrate how closely energy equities remain tied to geopolitical developments affecting key chokepoints for crude shipments.
Note: The information in this report reflects public statements attributed to Iranian officials and market moves reported contemporaneously. Details of implementation for the announced transit procedures were not provided beyond the reference to a "coordinated route" by Iran's maritime authorities.