Oil prices retreated to levels seen early in the Iran conflict as U.S. stocks surged to a fresh peak on Friday. This came after Iran announced the reopening of the Strait of Hormuz for commercial oil tankers transporting oil from the Persian Gulf globally.
The S&P 500 skyrocketed by 1.2%, hitting a record high and marking its third consecutive week of substantial gains. This streak is the longest since Halloween. A possible increase in oil supply could alleviate pressure on gasoline prices, as well as prices for various goods transported by vehicles.
The Dow Jones Industrial Average initially surged by up to 1,100 points before settling at an 868-point gain, representing a 1.8% increase. The Nasdaq Composite also climbed by 1.5%.
In Canada, the S&P/TSX Composite Index closed up by 294.06 points, reaching 34,346.29.
The U.S. stock market has surged over 12% since hitting a low in late March, fueled by optimism that the U.S. and Iran could avoid a severe economic downturn due to the conflict.
The Strait of Hormuz’s apparent reopening, though potentially temporary, is a strong indicator of optimism. President Donald Trump mentioned in a speech that the conflict “should be ending pretty soon.”
The price of benchmark U.S. crude plummeted after Iran’s foreign affairs minister, Abbas Araghchi, declared the strait completely open for commercial vessels, following a 10-day ceasefire in Lebanon. U.S. oil dropped by 9.4% to $82.59 per barrel, while Brent crude fell by 9.1% to $90.38 per barrel.
Despite the decline, oil prices remain above pre-conflict levels, indicating lingering caution in financial markets.
While the news initially boosted market sentiment, questions surrounding vessel movement in the strait persist. Analysts are cautious about the gradual resumption of traffic due to potential hesitancy among insurers and shipowners.
Companies heavily reliant on fuel, such as airlines and cruise operators, saw significant gains following the drop in oil prices. United Airlines and cruise operators like Royal Caribbean Group and Carnival saw notable increases in their stock prices.
Strong earnings reports from major U.S. companies have also buoyed the market, with several financial firms reporting better-than-expected profits for the beginning of 2026.
In overseas markets, European stock indexes surged after Iran’s announcement regarding the strait, with France’s CAC 40 rising by 2.2% and Germany’s DAX by 2.3%. In Asia, however, indexes closed weaker, with Japan’s Nikkei 225 down by 1.8% and Hong Kong’s Hang Seng by 0.9%.
Bond markets experienced a significant drop in Treasury yields as oil price declines alleviated inflation concerns, with the 10-year Treasury yield falling to 4.24% from 4.32% the previous day.