Oil markets experienced a dramatic reversal Friday as geopolitical tensions eased and a critical shipping route reopened. According to OilPrice.com, oil prices sank 10% after Iran's Foreign Minister Abbas Araghchi announced that the Strait of Hormuz is "completely open" to commercial shipping for the remainder of the U.S.-Iran ceasefire. The declaration drew immediate public thanks from President Trump, signaling a potential de-escalation in the conflict that had rattled energy markets all week.

The price action was swift. MarketWatch reported that U.S. oil prices dropped below $83 a barrel following Iran's announcement, while OilPrice.com noted that WTI was trading at $93.26 in early Asian trade, down 1.51%, with Brent crude falling 1.03% to $98.37. This represented a dramatic pullback from the triple-digit levels both benchmarks had spiked to at the start of the week, according to OilPrice.com.

The reopening of the Strait of Hormuz matters because it's the world's most vital oil shipping lane. OilPrice.com noted that oil prices had held steady below $100 per barrel since the U.S. initiated a naval blockade earlier in the week to deter Iran-linked ships from passing through the critical waterway. The volatility throughout the week reflected traders' uncertainty about the geopolitical situation—WTI traded through a volatile stretch driven almost entirely by headlines tied to the U.S.-Iran conflict, according to OilPrice.com, with June WTI crude trading at $89.23 by Thursday night.

European Oil Majors Capitalize on Trading Volatility

While prices fell, the week's turbulence created distinct winners and losers in the energy sector. According to Reuters, European oil majors outshined their U.S. rivals with what the news service described as an "Iran war trading bonanza." The divergence highlights how geopolitical shocks can create trading opportunities for companies positioned to capitalize on volatility.

Meanwhile, supply concerns that had driven prices higher earlier in the week are beginning to ease. Reuters reported that Hungary's Magyar said oil flows via the Druzhba pipeline could resume next week, potentially adding another source of supply relief to markets already calmed by the Strait of Hormuz reopening.

India Settles Iranian Oil Purchases in Yuan

Behind the scenes, the temporary window for Iranian oil purchases is reshaping payment flows in global energy markets. According to Reuters, Indian refiners that have bought Iranian crude under a one-month U.S. waiver on Iran's oil loaded on tankers are settling purchases in Chinese yuan via the Shanghai office of India's ICICI Bank. OilPrice.com reported that after initial hesitancy following the temporary U.S. waiver, some Indian refiners have opted to buy Iranian oil during the window that closes on May 17.

The use of yuan for these transactions underscores how sanctions and geopolitical tensions are accelerating the shift away from dollar-denominated energy trades, even as the immediate crisis appears to be easing.

Natural Gas Finds Support in Weather Forecasts

While crude oil dominated headlines, natural gas markets moved in a different direction. According to Natural Gas Intel, May Nymex natural gas futures moved higher overnight on cooler weather forecasts, even as the fragile Israel-Lebanon ceasefire tempered broader geopolitical risk. The divergence between oil and gas reflects how different commodities respond to distinct supply and demand drivers.

The week's dramatic swings underscore how quickly energy markets can shift when geopolitical risks change. From triple-digit oil prices at the start of the week to sub-$83 crude by Friday, traders have experienced a sharp reminder that the Strait of Hormuz remains the fulcrum on which global energy markets balance. As talks between the U.S. and Iran potentially resume this weekend, according to OilPrice.com, the next moves in oil prices will likely depend on whether the ceasefire holds and whether diplomatic progress can be sustained.

Reporting based on coverage from MarketWatch, OilPrice.com, Reuters, Natural Gas Intel, and Financial Times.