Oil prices experienced a decline while stock markets saw a rise following President Donald Trump’s announcement about a potential end to the conflict with Iran, coupled with the opening of the Strait of Hormuz if Tehran agrees to a deal with Washington. Trump took to social media to express that if Iran accepts the terms previously agreed upon, the conflict, referred to as “Epic Fury,” would conclude, and the blockade would facilitate the Strait of Hormuz being accessible to all, including Iran. However, the president also issued a stern warning that failure to reach a deal would result in escalated bombing campaigns of greater intensity.
This development follows Trump’s decision to temporarily halt the “Project Freedom” operation, which involved escorting vessels through the strategically vital Strait of Hormuz, a passage that handles approximately 20% of the world’s oil supply. Iran had imposed a blockade on this critical channel since late February, leading to a global energy crisis. While Trump indicated a short-term pause to finalize negotiations with Tehran, he maintained that the blockade on Iranian ports would persist. Responding to the U.S. decision to pause operations, Iran’s Revolutionary Guards’ Navy assured that safe passage through the strait would be guaranteed with new procedures, marking their initial response to the situation.
The announcement had an immediate impact on global markets. Brent crude oil, which had surged by up to 6% earlier in the week due to ongoing Middle Eastern tensions, plummeted 11% to reach a low of $97 per barrel, its first dip below $100 since April 22. Similarly, wholesale gas prices saw a decrease, with the British June contract dropping 6.3% to 107.8p a therm. The prospect of improved international travel buoyed airline stocks. The decline in crude oil prices accelerated after reports suggested that the White House was close to securing a memorandum of understanding to conclude hostilities with Iran, potentially paving the way for comprehensive nuclear discussions.
Despite the initial drop, oil prices recovered some ground later in the trading day, with Brent crude trading at $101.83 per barrel as Iran dismissed the news as merely an “American wishlist” without basis in reality. The Revolutionary Guards did not elaborate on the specifics of the new procedures for the Strait of Hormuz but extended gratitude to shipowners and captains for adhering to Iranian regulations during transit.
In Europe, stock markets responded positively. The FTSE 100 index in the UK climbed by 2%, while France’s Cac 40 increased by 3%, and Germany’s Dax saw a 2.1% rise. The MSCI’s All-Country World Index reached a new peak, advancing by 1.6%, alongside record achievements for its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.