The narrow sea passage that connects the Persian Gulf with the Gulf of Oman and the Arabian Sea has been declared reopened by the Iranian foreign minister Abbas Araghchi.
Tehran is set to remove its blockade for the remainder of the ceasefire between Israel and Lebanon.
However, writing on Truth Social, the US president said its counter blockade on Iranian ports will remain in full force until a deal to end the war is struck.
Crude oil has dropped by 10% amid cautious optimism that energy shipments could resume.
Speaking on the impact of the news, Raj Abrol, CEO of risk platform Galytix said: “Reopening the Strait is welcome news, but the damage to credit conditions won’t reverse as quickly as the oil price moves.
“Since late February, corporate borrowing costs for lower-rated firms have more than doubled, UK gilt yields hit 5% for the first time since 2008, and over 1,500 mortgage products were pulled from the market. Those don’t snap back because a ceasefire is announced. The word ‘fragile’ matters here. Lenders and businesses need sustained stability, not a two-week window. Supply chains that were rerouted around Africa don’t switch back overnight.
“Insurance premiums that spiked 50% won’t come down until underwriters believe the risk has genuinely changed. And any bank whose credit monitoring depends on quarterly reviews has already missed the stress that built up over the past seven weeks. The real question now is how quickly this translates into lower energy costs for businesses and households, and whether it holds long enough for the Bank of England to resume cutting rates. Until then, the squeeze on borrowers continues.”
Daniela Hathorn, senior market analyst for Capital.com said the news is a “meaningful short-term de-escalation signal but it should be interpreted with caution given how fluid the situation has been”.
She continued: “On the surface, this is clearly positive for markets. However, the key issue is credibility and durability. The Strait has already moved between ‘open’ and ‘restricted’multiple times during the ceasefire period, often in response to developments elsewhere in the region.
“From a market perspective, this reinforces the current regime: headline-driven volatility with asymmetric reactions. Positive news like this can trigger sharp relief rallies, but those moves are often fragile because the underlying drivers of the conflict remain unresolved.
“In essence, this development reduces immediate tail risk but does not eliminate it. Markets are treating it as a step toward normalisation with oil drifting lower and stocks taking the chance to stage another rebound.”
