What the Hormuz Strait deal means for Croatia

Global markets reacted strongly after Iran agreed to reopen the strategic Hormuz Strait following heightened tensions in the Middle East, sending oil prices sharply lower and easing fears of a global energy disruption.

On the London market, the price of a barrel of oil dropped around 13% to $94.9, while on the US market it fell more than 14.5% to $96.5 per barrel. The fall pushed prices back below the $100 mark, bringing relief to global markets and major oil-importing economies.

Stock markets also surged worldwide, with gains recorded across Asia, Europe and on Wall Street. European shares climbed about 3%, while Germany’s DAX index jumped nearly 5%, reflecting strong investor optimism after weeks of uncertainty.

However, the positive momentum slowed after reports emerged that traffic through the strait had once again been temporarily blocked, highlighting how fragile the situation remains.

The easing of tensions followed the announcement of a two-week ceasefire in the Middle East. The agreement immediately impacted oil markets, causing crude prices to fall sharply.

For large energy importers such as India, the drop in oil prices offers significant relief. The country imports roughly 70–75% of its energy needs, meaning fluctuations in global oil prices have a direct impact on its economy.

Financial markets responded quickly, with bond prices strengthening and major indices rising as investors welcomed signs of stability in global energy supply routes.

Despite the sharp fall in crude prices, industry experts warn that some sectors will take longer to feel the benefits.

Airlines in particular are expected to continue facing elevated fuel costs in the near term, even as oil prices decline. Aviation leaders say it could take several months for fuel costs to return to more typical levels.

Jet fuel prices remain sensitive to supply disruptions and refining capacity, meaning airlines may not see immediate savings.

Croatian Experts: Supply Should Remain Stable

Energy experts in Croatia have welcomed the ceasefire and the reopening of the Hormuz Strait, though they caution that the long-term outlook remains uncertain, HRT reported.

Concerns remain about potential damage to oil production and refining infrastructure in parts of the Middle East. If production capacity has been affected, shortages of diesel, petrol and other refined products could still occur in the short term.

However, Croatia is unlikely to face supply disruptions.

Officials say the country’s fuel needs can be met by domestic production at the Rijeka refinery, which is currently operating at full capacity.

The refinery produces a full range of fuels and maintains stable and continuous output. Croatia’s national oil company also supplies jet fuel to the country’s seven largest airports, ensuring regular deliveries.

Government Monitoring Situation

Croatian Prime Minister Andrej Plenković described the easing of tensions as positive news for both the global economy and Croatia’s energy security.

He noted that falling oil prices are already visible in international markets and could benefit businesses and consumers alike.

The government is also considering additional measures to protect consumers should oil prices surge again. One option under discussion is the introduction of a so-called “floating VAT” mechanism.

Such a system would allow the government to adjust VAT rates on fuel more frequently, potentially on a weekly or bi-weekly basis, as a way of stabilising retail prices during periods of extreme volatility.

Opposition figures have expressed support for the idea, arguing that authorities should have as many tools as possible to influence fuel prices. However, they also warn that Croatia continues to face higher inflation than many European Union countries, despite regulated fuel prices.

The recent tensions have underlined how sensitive global energy markets remain to disruptions in key supply routes.

Around a fifth of the world’s oil passes through the Hormuz Strait, making it one of the most strategically important shipping lanes in the global energy system.

For now, markets have responded positively to the ceasefire and the reopening of the passage. But analysts warn that stability will depend on whether the agreement holds and whether oil tankers can resume normal transit through the strait.

For Croatia, authorities say there is no immediate risk of fuel shortages, but global developments will continue to play a crucial role in shaping energy prices in the months ahead.