Oil prices fell sharply while stock markets saw gains following President Donald Trump’s assertion that the conflict with Iran could soon conclude, and the Strait of Hormuz might be accessible to all, contingent upon Tehran reaching an agreement with Washington. Trump communicated via social media, stating that if Iran fulfills the agreed terms, the conflict, dubbed Epic Fury, will cease, allowing the crucial maritime passage to be open, including to Iran. However, he also warned that without a deal, military actions would intensify to unprecedented levels.
This development came after Trump announced a temporary halt to “Project Freedom,” an operation aimed at assisting ships through the Hormuz Strait, which has been under an Iranian blockade since February, contributing to a global energy crisis. Trump emphasized that while the operation is paused to negotiate with Tehran, the blockade on Iranian ports will persist. Iran’s Revolutionary Guards’ Navy responded, indicating that safe transit through the strait is assured as U.S. threats diminish, although details on new procedures remain unspecified.
The news led to a significant drop in Brent crude oil prices, which fell 11% to $97 a barrel, marking the first instance of prices dipping below $100 since April 22. Wholesale gas prices also decreased, with the British June contract dropping 6.3% to 107.8p a therm. Airline stocks experienced a surge due to improved prospects for international travel. The oil price decline accelerated following a report indicating that the White House was nearing an agreement to end the war with Iran, potentially laying groundwork for future nuclear discussions.
Despite the initial drop, oil prices later recovered some losses, trading at $101.83 a barrel, after Iran dismissed the U.S. terms as an “American wishlist.” The statement from Iran’s Guards thanked shipowners for complying with Iranian regulations, though it did not elaborate on procedural changes. Previously, oil prices had reached $126 a barrel, driven by concerns over prolonged U.S. port blockades and stalled peace talks.
In the wake of these developments, European stock markets experienced a rally. The UK’s FTSE 100 index increased by 2%, France’s Cac 40 climbed 3%, and Germany’s Dax rose by 2.1%. Additionally, MSCI’s All-Country World Index gained 1.6%, achieving a new record alongside similar highs in its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which surged by 2.5%.