Global oil prices experienced a decline while stock markets showed an upward trend following President Donald Trump’s announcement regarding the potential conclusion of hostilities with Iran. Trump declared that the Strait of Hormuz, a crucial passage for global oil transport, would remain accessible provided that Tehran agrees to a deal with Washington. In a social media post, Trump emphasized that the “already legendary Epic Fury” conflict would cease if Iran consents to the terms already negotiated. However, he cautioned that if no agreement is reached, military actions would escalate significantly.
The announcement came in the wake of Trump’s decision to temporarily halt the “Project Freedom” operation, which involved escorting ships through the strategically significant Strait of Hormuz. This waterway, vital for about 20% of the world’s oil supply, has been under an Iranian blockade since late February, leading to a global energy crisis. Despite the pause in escort operations, Trump assured that the blockade of Iranian ports would continue. In response, Iran’s Revolutionary Guards’ Navy indicated that new measures would ensure the safe passage of vessels through the strait, marking the first official response from Tehran since the U.S. suspended its operations aimed at aiding stranded ships.
The news initially caused a significant drop in Brent crude oil prices, which had surged earlier in the week due to Middle Eastern tensions. The price plummeted 11%, hitting a low of $97 per barrel, marking the first time it dipped below $100 since April 22. Wholesale gas prices also declined, with the British June contract falling 6.3% to 107.8p a therm. Meanwhile, airline stocks saw a boost, reflecting optimism for international travel prospects. The downtrend in oil prices gained momentum following reports suggesting that the U.S. was nearing a memorandum of understanding with Iran to conclude the conflict, sparking hopes for detailed nuclear negotiations.
Later in the day, oil prices partially recovered, trading at $101.83 per barrel, reflecting a 7.3% drop, after Iran dismissed the U.S. proposal as merely an “American wishlist [and] not a reality.” Despite this, the Iranian navy expressed gratitude to shipowners and captains who adhered to regulations while navigating the critical waterway, although specific details of the new procedures were not disclosed.
Amid these developments, European stock markets experienced a rally. The UK’s FTSE 100 index climbed by 2%, France’s Cac 40 increased by 3%, and Germany’s Dax rose 2.1%. MSCI’s All-Country World Index also reached a new record, alongside milestones for its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which saw a 2.5% increase. The oil price had previously surged to $126 a barrel, the highest since 2022, following Trump’s remarks about the potential duration of the U.S. blockade of Iranian ports and the stalled peace negotiations.