Brent crude fell sharply on Wednesday after Iranian state television reported that Tehran had committed to restoring commercial transit shipping through the Strait of Hormuz.
Iran said it would return the number of commercial transit ships through the strait to pre-war levels within a period of one month, according to state media reports.
Oil markets reacted swiftly to the announcement, with Brent crude dropping approximately four percent following the news from Iranian state television.
Brent crude, which serves as the international benchmark for oil pricing, fell to $95.24 a barrel following the Iranian pledge on shipping restoration.
The drop in oil prices reflects market sensitivity to any developments affecting the Strait of Hormuz, one of the world’s most critical shipping corridors for energy supplies.
The decline came amid broader currency market movements, with the US dollar slipping 0.2% against a basket of other major currencies on the same day.
The Strait of Hormuz has long been a focal point for global energy markets, as disruptions to shipping through the waterway can significantly affect oil supply chains.
Iran’s pledge to restore commercial transit volumes to pre-war levels within a month provided markets with a degree of reassurance about near-term supply disruptions in the region.
Traders and analysts have been closely monitoring developments in and around the strait, given the significant proportion of global oil shipments that pass through the narrow waterway.
The combination of the Iranian announcement and the subsequent oil price decline highlights the direct and immediate impact that geopolitical developments in the region can have on global energy markets.