Brent oil drops 10% after Iran reopens the Strait of Hormuz

Crude oil prices fell sharply on Friday after the Iranian government announced that the Strait of Hormuz had been reopened to all commercial shipping.

Brent crude dropped by around 10% immediately following the statement during early U.S. trading, reaching a five-week low and marking its steepest daily decline since March 23.

The latest selloff further deteriorated the near-term technical outlook, extending losses after a break above the rising and thickening daily Ichimoku cloud, alongside a bearish crossover between the Tenkan-sen and Kijun-sen and strengthening downside momentum.

Sellers also pushed prices below the key psychological $90 level and broke an important Fibonacci support at $89.09, representing the 50% retracement of the $58.70/$119.47 rally, with a weekly close below these levels needed to confirm a broader bearish signal.

The move comes amid renewed optimism that the conflict destabilizing the Middle East may be approaching an end, easing fears that previously disrupted global energy markets.

Brent crude is now on track for a second consecutive week of steep losses, which has also contributed to an improvement in overall risk sentiment.

On the downside, immediate support is seen at $86.54 (55-day moving average), followed by $81.91 (61.8% Fibonacci retracement) and the $80.00 psychological level.

Former support levels at the broken cloud base near $89.61 and the $90 mark are now expected to act as resistance.

Res: 89.09; 90.00; 93.32; 94.30
Sup: 86.54; 83.16; 81.91; 80.00