Oil prices dropped heavily on Friday. The fall came after Iran confirmed that the Strait of Hormuz will stay open during the ceasefire period. This route is crucial for global oil supply. Any disruption here usually pushes prices up fast.
Brent crude fell by 9% to $90 per barrel. US benchmark WTI dropped even more by 9.5% to $82.60. This is one of the sharpest single day declines in recent weeks.
The reason is simple. When supply routes stay open, fear in the market goes down. Traders stop pricing in risk. That leads to a quick drop in oil prices.
Iran’s foreign minister Seyed Abbas Araghchi said all commercial ships can pass through the route. However, they must follow a fixed path decided by authorities. This move signaled temporary stability in the region.
Even after the drop, oil prices are still above pre war levels. Brent was earlier around $73 and WTI near $67. So the market is still carrying some risk premium.
Dow futures surge as stock market rallies
While oil fell, stock futures moved in the opposite direction. US markets showed strong gains in early trading signals.
Dow futures jumped by 560 points. That is a rise of 1.16%. S&P 500 futures climbed 0.8%. Nasdaq 100 futures gained 0.9%.
This shows how closely stocks and oil are linked to global tensions. When war fears ease, stocks usually rise. Investors feel more confident about economic growth.
The Nasdaq Composite is already on a strong run. It has gained for 12 straight sessions. This is its longest streak since 2009. If it rises again, it will mark the longest winning run since 1992.
Ceasefire news lifts market sentiment
The positive mood is also tied to the ceasefire between Israel and Lebanon. US President Donald Trump said both sides agreed to pause fighting for 10 days. This news gave markets a sense of relief. Investors are now hoping the conflict may not escalate further.
Still, the situation remains uncertain. The ceasefire is temporary. Any new tension can quickly reverse these gains.
For now, markets are reacting to one thing. Reduced fear. That alone is enough to push stocks up and pull oil down in a big way.