Oil prices tumbled on Friday after Iranian officials said they would allow commercial traffic to resume in the Strait of Hormuz. This lifted equity markets in Europe and New York, where major indices hit new records.

Citing the ceasefire between Israel and Lebanon, Iran’s Foreign Minister Abbas Araghchi said Tehran would lift its blockade on shipping through the key Gulf energy trade route.

“In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire,” Araghchi said.

Traffic in the strategic waterway, through which one-fifth of the world’s crude oil normally flows, has been disrupted by Iran since the US-Israeli offensive began on Feb. 28. At one point, this sent oil prices to a peak of nearly $120 a barrel and roiled the global economy.

Both Brent, the benchmark international contract, and its US equivalent WTI fell below $90 per barrel following Tehran’s announcement. Brent later cut its losses and finished at $90.38 a barrel, down 9.1%.

‘Immediate impact’

“This news is having an immediate impact on markets,” said Kathleen Brooks, research director at XTB.

The move also sent a jolt through equity markets, extending a rally in New York. There, equities have pushed ever higher since late March in anticipation of a breakthrough in the Middle East crisis.

“We had seen a big move the last two weeks, and now it’s just really pricing completely out the worst-case scenario, said Angelo Kourkafas, from Edward Jones.

Kourkafas also pointed to underlying strength in the US economy that should get more attention in the coming period as geopolitical concerns ebb.

“Geopolitical developments are moving in the right direction, and at the same time, the earning strength is hard to ignore,” Kourkafas said.

The broad-based S&P 500 finished at 7,126.06, up 1.2% for the day and 4.5% for the week.

‘Good news’

Earlier, European stocks closed higher, with both Frankfurt and Paris gaining 2%.

US President Donald Trump cheered the reopening of the Strait of Hormuz in an interview with AFP.

“We’re very close to having a deal,” Trump said in a brief telephone call with AFP from Las Vegas. He added there were “no sticking points at all” left with Tehran.

But Iran quickly pushed back on one key point.

Iran’s foreign ministry said Friday that its stockpile of enriched uranium would not be transferred “anywhere.” It rejected an earlier claim by Trump that the Islamic Republic had agreed to hand it over.

Shipping industry figures, meanwhile, gave a cautious welcome to Iran’s announcement.

A spokesman for German transportation giant Hapag-Lloyd, which has ships stuck in the Gulf, told AFP by phone that the reopening was “in general… good news.”

But he cautioned that shippers still needed details of what route vessels could take and in what order, citing fears of mines.

“One thousand ships cannot just go now to the entrance of the strait, that will be chaos. They (the Iranians) need to give clear orders,” said the spokesman, Nils Haupt.

“We would be ready to go very soon if some of these open questions can be solved within the weekend.”