Iran Declares Strait of Hormuz Open to Commercial Ships; Trump Says US Naval Blockade Stays in Full Force as April 22 Ceasefire Deadline Approaches

Iran's Foreign Minister Abbas Araghchi announced Friday that the Strait of Hormuz is declared completely open for all commercial vessels for the remaining period of the ceasefire, a development that sent mixed signals through global oil markets already watching an April 22 deadline with alarm. Within hours, President Donald Trump countered that the US naval blockade of Iranian ports will remain in full force until a full peace agreement is signed, leaving traders to parse whether Iranian tankers, not just commercial ships, could actually transit the waterway without incident.

Brent crude for June delivery settled near $97 per barrel in London on Thursday, while West Texas Intermediate held above $94, reflecting a market caught between relief over Iran's gesture and skepticism over whether the competing declarations can coexist without incident. The Strait of Hormuz handles roughly one-fifth of global oil and gas transit, and its effective closure since early March triggered what the International Energy Agency has described as the largest supply disruption in the history of the global oil market.

Two Declarations, One Chokepoint

The timing of Friday's dual announcements is directly tied to a fresh diplomatic development: a 10-day ceasefire between Israel and Lebanon's Hezbollah took effect Friday, and Iran signaled it would reciprocate by formally declaring the strait open for the ceasefire's duration. Iran's statement specified that commercial vessels would use a coordinated route in coordination with Iranian Armed Forces, language that leaves significant operational ambiguity for shipowners and their insurers.

The US blockade, announced after a failed round of talks in Islamabad collapsed on April 12, technically applies to Iranian-flagged vessels and ports rather than the strait itself. But in practice, the competing claims create a legal and operational grey zone that shipping companies and protection-and-indemnity clubs have been unwilling to test. War risk premiums for Gulf voyages remain at elevated levels, with maritime brokers citing surcharges of 1.5 to 3 percent of hull value per voyage, costs that effectively strand cargoes even when no physical barrier exists.

Ceasefire Extension Talks Advance

With the original two-week US-Iran ceasefire set to expire April 22, mediators are working urgently toward an extension. Pakistani Army Chief Asim Munir, who has been serving as a trusted intermediary for President Trump, led a rare delegation to Tehran this week, and both Washington and Tehran are reported to be weighing a further two-week extension to allow technical-level talks to continue on the most contentious issues: permanent Hormuz reopening terms and the future of Iran's nuclear program.

The diplomatic progress stands in contrast to the physical oil market, where 230 loaded tankers remain anchored in the Persian Gulf awaiting clearance, according to data cited in OPEC's May production decision earlier this week. Each day those vessels remain idle represents approximately 460 million barrels of stranded cargo if loaded to average VLCC capacity, a figure that gives some context to the violence of the price swings whenever ceasefire news crosses the wires.

Price Context: Brent's Volatile Six Weeks

Brent has swung by more than 50 percent in the six weeks since the Hormuz closure began. The benchmark surged past $120 per barrel in physical markets during the sharpest phase of the disruption, then crashed 16.5 percent on April 8 when Trump announced the original two-week ceasefire, only to climb back toward $100 when the Islamabad talks failed. Thursday's settle near $97 reflects a tentative middle ground: the market is pricing in some probability of Hormuz reopening while hedging against a breakdown before April 22.

The EIA's April Short-Term Energy Outlook raised its 2026 Brent average forecast to $96 per barrel, projecting a $115 per barrel peak in Q2 2026 if the disruption persists. Goldman Sachs has separately modeled that another month of full Hormuz closure would push Brent above $100 for the remainder of 2026. Western Canadian Select differentials have widened materially, with WCS trading at a discount of more than $16 per barrel to WTI as pipeline alternatives absorb diverted volumes and refinery margins shift to accommodate heavier crudes outside the disruption zone.

Gulf Producers Caught Between Competing Declarations

Saudi Aramco March production fell 23 percent to 7.8 million barrels per day from 10.1 million bpd before the crisis, according to OPEC data. The kingdom's East-West Pipeline, which routes crude from Abqaiq to the Red Sea terminal at Yanbu, was restored to full capacity on April 12 after a drone attack on April 8 knocked out 700,000 bpd of export capacity. Kuwait's output declined 53 percent month-over-month, and the UAE fell 44 percent, as both producers similarly lacked sufficient alternative routing.

Iraq, OPEC's second-largest producer, saw the steepest collapse: output from southern fields fell more than 70 percent, with Basra exporting only a fraction of its pre-war 3.4 million bpd. The country's revival timeline depends entirely on Hormuz access because Iraq, unlike Saudi Arabia and the UAE, has no meaningful bypass pipeline to non-Gulf export terminals.

Market Outlook

Oil traders and shipping analysts are treating Friday's dual declarations as a narrow positive that falls well short of resolving the underlying standoff. For Hormuz to functionally reopen at scale, both Iran's physical declaration and the US posture on the blockade need to align, and protection-and-indemnity insurers need to green-light voyages. None of that is in place yet.

The ceasefire expiry on April 22 is now the dominant near-term catalyst. If both sides agree to extend and technical talks make progress, the market consensus sees Brent testing the $90 level on relief selling. If talks collapse again, analysts at ANZ and Citi both project Brent returning to the $110 to $120 range within two weeks as the market re-prices a prolonged closure. With roughly 20 percent of global oil supply still effectively stranded, the April 22 deadline may rank as the most consequential date in oil markets since the 2020 COVID demand collapse.