Oil prices plummeted by more than 10 per cent on Friday, extending earlier losses, following an announcement from Iran’s foreign minister that the Strait of Hormuz remains open for all commercial vessels during the current ceasefire period, mirroring the ceasefire in Lebanon.

Brent crude futures LCOc1 dropped by $11.12, or 11.2%, to $88.27 a barrel at 13:11 GMT. US West Texas Intermediate crude futures CLc1 fell $11.40, or 12%, to $83.29 a barrel.

The fall in prices came after Iranian foreign minister Abbas Araghchi wrote on X: “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, on the coordinated route as already announced by Ports and Maritime Organisation of the Islamic Rep. of Iran.”

US president Donald Trump confirmed the news with his own post on Truth Social, writing: “Iran has just announced that the Strait of Iran is fully open and ready for full passage! Thank you!”

UBS analyst Giovanni Staunovo stated: “Comments from Iran’s foreign minister indicate a de-escalation as long as the ceasefire is in place, now we need to see also if the number of tankers crossing the Strait increases substantially.”

The market had already seen prices decline earlier in the day amid speculation of further talks between the US and Iran over the weekend, coupled with a 10-day ceasefire between Lebanon and Israel, fueling investor optimism that the wider Middle East conflict might be drawing to a close.

Adding to the diplomatic momentum, Donald Trump stated that Tehran had offered not to possess nuclear weapons for more than 20 years, addressing a significant point in ongoing discussions.

“We’re going to see what happens. But I think we’re very close to making a deal with Iran,” Trump told reporters outside the White House on Thursday.

The boss of Tesco has said the supermarket giant will do “whatever we can” to keep down the price of food for shoppers as it warned that uncertainty linked to the Iran war is clouding its outlook for profits.

The UK’s largest supermarket chain said it has not yet seen any impact on product availability or prices, excluding fuel, since the conflict began at the end of February.

However, it said has been in contact with the Government to help plan for a worst-case scenario which could see the ongoing war lead to shortages of carbon dioxide used by the food industry.

Ken Murphy, chief executive of Tesco, told reporters: “We haven’t seen any issues and are in very strong shape.

“We constantly talk to our suppliers and none of our suppliers have raised any issues.”

He also said the retailer does not recognise predictions from the Food and Drink Federation that food inflation could jump above 9% this year if the conflict continues, stressing that it has not yet seen an impact on prices.

Fuel prices have already jumped higher in recent months due to the war between US-Israeli and Iranian forces, which have impacted energy production facilities and shipments through the Strait of Hormuz.

Mr Murphy said: “We are in good shape in our fuel stocks.

“We have seen elevated demand recently but we are still very competitively stocked.”

The boss also added that the retailer has not yet seen any impact from the conflict on customer sentiment in the UK.

It came as Tesco said that profits could dip over the current year as it flagged increased uncertainty linked to the conflict in the Middle East.

The UK’s largest supermarket group reported stronger-than-expected adjusted operating profits of £3.15 billion for the year to February 28, up slightly from £3.13 billion a year earlier.

The retailer said it expects this to be between £3 billion and £3.3 billion over the current financial year, telling shareholders it was “providing a wider range of guidance than we were previously planning” due to uncertainty caused by the Iran war.

Tesco also revealed that sales, excluding VAT and fuel, grew by 4.6% to £66.6 billion for the past year.

The group said on Thursday that it plans to make a further £500 million in cost savings in 2026/27, after surpassing its £535 million savings target last year.

Mr Murphy added: “We are committed to doing whatever we can to help keep down the cost of the weekly shop, and with the conflict in the Middle East creating further uncertainty for consumers and the economy more broadly, that commitment matters more than ever.

“Over the last year, despite cost pressures from new regulation, we have increased our investments in keeping prices low, further improving quality and offering even better service.

“Customers are choosing to shop more with us as a result, leading to our highest market share for over a decade.”

Tesco also announced that it will hand a £65 million award to its staff across its stores, warehouses and customers engagement centres following the latest performance.

Oil prices remained below $100 a barrel on Friday as Wall Street set another record and Asian stocks headed for a second consecutive week of strong gains, with markets watching for signs that the Iran war ceasefire expiring next week would be extended.

Brent crude fell 1.1 per cent to $98.31 a barrel and US benchmark crude dropped 1.4 per cent to $89.90, after Donald Trump said the next meeting between the US and Iran could take place over the weekend and suggested he was open to extending the two-week ceasefire beyond its expiry next week.

Iran’s UN envoy said Tehran remained “cautiously optimistic” over negotiations with the US. A 10-day ceasefire between Lebanon and Israel also went into effect on Thursday.

Asian markets pulled back on Friday despite Wall Street setting another record the previous session. Tokyo’s Nikkei fell 1 per cent to 58,930 after hitting an all-time high on Thursday. South Korea’s Kospi was 0.6 per cent lower, Hong Kong‘s Hang Seng dropped 1 per cent and the Shanghai Composite edged down 0.1 per cent. Australia’s S&P/ASX 200 lost 0.3 per cent and Taiwan’s Taiex traded 0.5 per cent lower.

MSCI‘s broadest index of Asia-Pacific shares outside Japan remained close to its highest level since 2 March, the first trading day after the Iran war broke out. The index is up 14.5 per cent in April after dropping 13.5 per cent in March, with almost all stock markets now back to pre-war levels.

On Wall Street, the S&P 500 closed 0.3 per cent higher at 7,041 on Thursday, a day after eclipsing its previous all-time high set in January. The Dow Jones Industrial Average rose 0.2 per cent to 48,578 and the Nasdaq added 0.4 per cent to 24,102.

However, the speed of the recovery has surprised some analysts, who warned markets may be underpricing the risks.

“There’s quite a strong contrast between what policymakers and central bankers are saying about the risks that this conflict is creating versus what the market is implying,” Andrew Chorlton, chief investment officer for public fixed income at M&G, told Reuters.

“That seems somewhat complacent. It seems unlikely that there shouldn’t be some additional risk premium priced in, either to growth or to inflation.”

Others pointed to the strait as the critical test for whether the rally could hold.

“I think equity markets are remaining positive and some solid US earnings have helped, but — and it’s a big but — we need to see some concrete evidence that peace is going to last,” Nick Twidale, chief market strategist at ATFX Global, told Reuters.

“A full reopening of the Strait, or we could see some substantial corrections in global stocks in the coming days and weeks.”

The stakes on the energy side are rising. The head of the International Energy Agency warned on Thursday that Europe had “maybe six weeks or so” of jet fuel supplies remaining and that flight cancellations were coming “soon”.

The closure of the Strait of Hormuz has caused the worst oil price shock in history — Brent crude has surged roughly 40 per cent since the start of the Iran war in late February — and prompted the IMF to downgrade its global growth outlook, warning that a prolonged conflict could push the world to the brink of recession.

The US dollar, which had benefited from safe-haven demand in March, has since given up those gains, with the dollar index near its lowest level since 2 March after eight straight sessions of decline. The euro held at $1.1778 while the Australian dollar, considered a risk-sensitive currency, drifted near a four-year high. Gold edged up 0.1 per cent to $4,814.60 an ounce and silver gained 0.4 per cent to $79.04.