Oil prices declined while stock markets saw an uptick following President Donald Trump’s announcement suggesting that the conflict with Iran could conclude, and the Strait of Hormuz might be accessible to all if Tehran agrees to a deal with Washington. On social media, Trump stated that if Iran complies with the existing agreements, the operation “Epic Fury” would end, and the blockade would enable open passage through the Hormuz Strait, benefiting Iran as well.
However, Trump warned that failure to reach an agreement with Iran would result in intensified bombings, surpassing previous levels of severity. This statement came as he announced a temporary pause in “Project Freedom,” which has been facilitating the escort of ships through the strait. The Strait of Hormuz, crucial for about 20% of the world’s oil supply, has been under an Iranian blockade since late February, contributing to a global energy crisis. Despite the pause, Trump noted that the blockade of Iranian ports would continue. In response, Iran’s Revolutionary Guards’ Navy assured safe passage through the strait, marking their initial reaction to the U.S.’s operational pause.
The news led to a significant drop in Brent crude oil prices, which had surged by 6% earlier in the week due to Middle Eastern tensions, plummeting by 11% to $97 a barrel. This marked the first time crude prices fell below $100 since April 22. Concurrently, wholesale gas prices dropped, with the British June contract decreasing by 6.3% to 107.8p per therm, while airline stocks rose on the prospect of improved international travel. Market movements were further influenced by reports that the White House was nearing a memorandum of understanding with Iran to end the conflict, potentially setting the stage for detailed nuclear discussions.
Later in the day, oil prices recovered some losses, trading down 7.3% at $101.83 a barrel, as Iran dismissed the U.S. proposal as an “American wishlist.” The Revolutionary Guards’ statement did not detail the new procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations in the strait. This price fluctuation follows a recent peak of $126 a barrel, the highest since 2022, driven by Trump’s comments on the potential duration of the port blockade and stalled peace negotiations.
European stock markets responded positively to the developments, with the UK’s FTSE 100 index rising by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax climbing 2.1%. Additionally, MSCI’s All-Country World Index reached a new record, increasing by 1.6%, alongside similar advances in its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.