Oil prices experienced a sharp decline, while stock markets saw an upswing following comments from Donald Trump suggesting an end to the conflict with Iran and the reopening of the Strait of Hormuz, contingent on Tehran reaching an agreement with Washington. The U.S. president took to social media, stating that if Iran complied with previously agreed terms, the “Epic Fury” conflict would conclude, and the blockade would permit the strait to be accessible to all, including Iran. However, Trump also warned that failure to reach a deal would lead to intensified bombing campaigns.
Trump announced a temporary halt to his “Project Freedom” operation, which involved escorting ships through the strategically crucial strait, responsible for transporting about 20% of the world’s oil supplies. The strait has been under an Iranian blockade since February, contributing to a global energy crisis. Despite pausing this operation to negotiate with Tehran, Trump emphasized that the blockade of Iranian ports would persist. In response, the Iranian Revolutionary Guards’ Navy indicated that safe passage through the strait would be assured, with new procedures forthcoming as U.S. threats subsided.
The announcement initially caused Brent crude oil prices to plummet 11%, dropping to $97 a barrel, marking the first dip below $100 since April 22. The decline followed earlier gains of up to 6% due to escalating tensions in the Middle East. Similarly, wholesale gas prices saw reductions, with the British June contract falling 6.3%. Airline stocks rose, buoyed by the improved outlook for international travel. The oil price decline accelerated after reports suggested the White House was nearing a memorandum of understanding to end hostilities with Iran, potentially paving the way for comprehensive nuclear negotiations.
Despite the initial drop, oil prices later moderated their losses, settling at $101.83 a barrel after Iran dismissed the proposed agreement as merely an “American wishlist.” The Iranian Guards’ statement did not elaborate on the new procedures but acknowledged the cooperation of shipowners and captains in adhering to Iranian regulations in the strait. This development came after oil prices had reached $126 per barrel, the highest since 2022, amid prolonged U.S. port blockades and stalled peace negotiations.
European stock markets responded positively, with the UK’s FTSE 100 index rising by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax climbing 2.1%. Globally, MSCI’s All-Country World Index hit a new record, advancing by 1.6%, while its emerging markets benchmark and the broadest index of Asia Pacific shares, excluding Japan, saw gains of 2.5%.