News that Iran reopened the Strait of Hormuz during the Israel-Lebanon ceasefire helped oil prices fall below 90 USD, while gold increased by 70 USD.
By 8:00 p.m. on April 17, Brent oil price dropped 10% to 89 USD per barrel. WTI oil dropped 11% to 83 USD.
Oil prices went down after Iran announced that the Strait of Hormuz was fully open for commercial shipping during the ceasefire between Israel and Lebanon.
WTI oil price decreased more than 11% in the session on April 17. Graph: Trading Economics
“The movement of all commercial ships through the Strait of Hormuz is completely open for the remainder of the ceasefire,” Iranian Foreign Minister Seyed Abbas Araghchi wrote on social networks on April 17. However, ships must travel according to “coordinated routes” announced by Iran’s maritime authorities, he said.
Israel and Lebanon previously agreed to a 10-day ceasefire from 5:00 a.m. on April 17. Israel’s military campaign in Lebanon targeting Hezbollah forces is a sticking point in peace negotiations between the US and Iran.
The Strait of Hormuz carries about 20% of global crude oil and liquefied petroleum gas. However, this waterway was almost blocked after fighting broke out in late February. This caused global energy prices to skyrocket recently due to lack of supply.
World gold prices are also increasing sharply following the news of the Strait of Hormuz reopening. Each ounce increased more than $70 to $4,860.
World gold prices rebounded in the evening session of April 17. Graph: Kitco
The cooling of the Middle East conflict is beneficial for precious metals. Recently, gold has been under pressure as the war pushed up energy prices, causing inflation to accelerate in many places. High inflation makes central banks hesitant to reduce interest rates. Gold prices are therefore at a disadvantage, because they do not pay fixed interest. Since the beginning of the war, gold has lost about 10%.