BP Shares Gain as US-Iran Deal Reopens Strait of Hormuz

BP.LON shares are trading higher on Friday, buoyed by a landmark US-Iran memorandum of understanding signed on Thursday that has begun the reopening of the Strait of Hormuz. As a result , Brent crude is on track for its steepest weekly decline since the conflict began in early March.

Shares in BP are trading at 498.4p, up 1.70% from Thursday’s close of 490.05p. The stock fell more than 10% over the prior week alongside oil prices, retreating from a peak around 606p reached in late March, but is recovering modestly on Friday as markets price in a reduced geopolitical risk premium.

Oil Prices Brace for Extended Decline

The catalyst for the oil price fall was the signing on Thursday of a 14-point memorandum of understanding between the United States and Iran, initiating a 60-day period of negotiations and committing both parties to allow passage through the Strait of Hormuz. Within hours, three Saudi-flagged supertankers carrying approximately 6 million barrels of crude exited the waterway, alongside other commercial vessels, according to Reuters. Those transits sent Brent crude to its lowest level since the conflict began, with the benchmark trading at approximately $79.78 a barrel on Friday morning and heading for a weekly decline of more than 8%.

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For BP, which generates a significant share of revenues from upstream oil production, lower Brent prices represent a headwind to earnings. Markets are trading BP shares higher on Friday, appearing to value the removal of operational uncertainty above the near-term drag from weaker oil.

Around 20% of global oil and liquefied natural gas supply transits the Strait of Hormuz. More than 500 vessels are estimated to be waiting to exit the Gulf, and traffic remains a fraction of the 120 to 130 daily transits seen before the war. Mine-sweeping operations are also expected to take several additional weeks before passage is considered fully safe.

However, doubts about the deal’s durability emerged on Friday: with Reuters reporting that planned US-Iran talks in Switzerland were cancelled after Vice President JD Vance dropped his travel plans, while Israel’s continued attacks in Lebanon raised further questions about regional stability, leaving the outlook for global oil supply uncertain in the weeks ahead.