The reopening of the Strait of Hormuz on May 13 triggered a sharp reversal across global markets, sending oil prices down and equities higher as investors moved quickly to unwind weeks of crisis positioning. Brent crude fell 13.6% to $99.27 a barrel, while U.S. benchmark WTI dropped 12.8% to $96.45, marking one of the steepest one-day declines since the 2020 oil shock. Stocks rallied in tandem, with the Dow Jones Industrial Average rising 1,042 points, or 2.8%, and the S&P 500 climbing to a record 6,342.
The move reflects how much geopolitical risk had been built into asset prices during the strait’s closure, which began on Feb. 28. The narrow waterway handles about 17 million barrels a day of crude and condensates, along with roughly a fifth of global LNG trade, making it the world’s most important energy chokepoint. By March, Brent had briefly reached $119 a barrel as traders priced in the possibility of a prolonged disruption to Gulf exports.
The relief spread well beyond crude. European natural gas futures fell 8.7% to €42.50 per megawatt-hour, while U.S. gasoline futures dropped 9.2% to $3.15 a gallon. Major equity markets outside the U.S. also advanced, with Japan’s Nikkei 225 up 2.1%, Germany’s DAX up 1.8% and the UK’s FTSE 100 up 1.6%, as lower energy costs improved the outlook for growth and inflation.
Energy shares lost ground, though the pullback was restrained relative to the fall in oil prices. The Energy Select Sector SPDR Fund fell 4.2%, while ExxonMobil slipped 2.1% and Chevron declined 3.4%. That suggests investors still see value in large integrated producers, which had outperformed during the crisis on the strength of their cash flow, balance sheets and defensive appeal.
The bigger adjustment may come in shipping and trade. Tanker rates and war-risk premiums had surged during the blockade, and those costs are unlikely to disappear overnight. Insurance pricing for vessels transiting Hormuz remains well above pre-crisis levels, indicating that a formal reopening is not the same as a full return to normal commercial conditions. Gulf exporters with alternative routes, including the UAE’s Habshan-Fujairah pipeline, are likely to keep using them until confidence in the corridor is rebuilt.
The disruption also exposed vulnerabilities across industrial supply chains. Fertilizer markets were hit hard during the closure, with urea prices jumping as exports from the Gulf were constrained. Aluminum and sulphur markets also tightened, underlining how quickly a disruption in Hormuz can spill into manufacturing and agriculture far beyond the oil market.
For investors, the main question now is whether this repricing marks the end of the energy shock or simply the removal of its most extreme risk premium. Much will depend on how smoothly commercial traffic resumes, how quickly inventories are replenished and whether insurers regain confidence in the route. Oil may struggle to revisit its recent highs if transit remains open, but transport costs and supply chains will take longer to normalize.
The reopening has eased the immediate pressure on markets, but it has also reinforced a longer-term lesson. Infrastructure that bypasses major chokepoints, along with diversified supply routes, is becoming more valuable in a world where geopolitical disruptions can reprice assets in a single session.