Recent developments surrounding the Strait of Hormuz and the ongoing ceasefire between Israel and Lebanon have led to significant volatility in both oil and equity markets. According to Rabobank’s Senior Market Strategist Benjamin Picton, Brent crude futures experienced a dramatic decline of more than 9% on Friday, settling at $90.38 per barrel, marking its lowest weekly close since the onset of the war. This drop was attributed to Iranian Foreign Minister Araghchi's statement on X that the Strait was 'completely open' to commercial vessels during the 10-day ceasefire. Dated Brent, representing the physical oil price for immediate delivery, also fell by more than 15% to $98.95 per barrel, its lowest since March 11th [1].
The equity markets responded positively to the perceived reduction in geopolitical risk, with the S&P 500 rising 1.20% to close at a new all-time high on Friday [1]. Deutsche Bank’s Jim Reid and colleagues further highlight that the S&P 500 posted a 4.54% weekly gain, its largest since May 2025, closing at a record high of 7126 (+1.20% on Friday). The index crossed the 7,000 threshold for the first time earlier in the week. The Nasdaq Composite also surged by 6.84% (+1.52% on Friday), marking its 13th consecutive day of gains, a streak not seen since 1992 [2].
However, the optimism was short-lived as markets began to reprice risk on Monday amid uncertainty over the durability of the ceasefire and the approaching expiry of the US-Iran ceasefire on Wednesday. Brent crude opened 7% higher, high beta FX was sold off sharply, and US equity futures pointed to losses of approximately 0.8% at market open [1]. Deutsche Bank analysts caution that while equity rallies have been fueled by easing stagflation fears and energy price relief, historical precedents such as the Ukraine conflict suggest that such rallies can reverse quickly if peace hopes diminish [2].
The broader market context, as described by Rabobank, is one of simultaneous bullishness and risk, with the IEA characterizing the current situation as the largest energy shock in history, yet stock indices remain near all-time highs [1].
CONCLUSION
The interplay between geopolitical developments in the Strait of Hormuz and market sentiment has driven sharp moves in both oil and equity markets. While hopes for a durable ceasefire initially fueled record highs in the S&P 500 and a drop in oil prices, renewed uncertainty has quickly reversed some of these gains. Market participants remain sensitive to further news on the ceasefire and geopolitical risk, with volatility likely to persist.