Oil prices experienced a significant drop and stock markets saw a rise following President Donald Trump’s announcement suggesting the potential end of the conflict with Iran. Trump stated that the Strait of Hormuz would be “open to all” if Iran reached an agreement with the United States. In a social media post, he mentioned that if Iran complied with previously agreed terms, the operation known as Epic Fury would conclude, allowing the blockade to permit passage through the strait for all, including Iran. However, Trump warned that without a deal, intensified bombing would commence.
The announcement came after Trump mentioned a temporary halt to “Project Freedom,” a U.S. operation escorting ships through the crucial Strait of Hormuz, which Iran has blockaded since late February, instigating a global energy crisis. The President emphasized that the blockade on Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy claimed that safe transit through the strait would be guaranteed, marking their first acknowledgment of the U.S. pause in operations designed to assist stranded vessels.
The initial news led Brent crude oil prices to plummet by 11%, reaching as low as $97 per barrel, marking its first dip below $100 since April 22. Similarly, wholesale gas prices dropped, with the British June contract decreasing by 6.3% to 107.8p a therm. Airline stocks, meanwhile, benefited from improved prospects for international travel. The decline in oil prices accelerated after indications from a report suggesting the White House was nearing a memorandum of understanding to end hostilities with Iran, which could set the stage for detailed nuclear discussions.
Despite the initial drop, oil prices rebounded slightly, settling at $101.83 a barrel, down 7.3%, after Iran dismissed the U.S. proposal as merely an “American wishlist.” The Revolutionary Guards’ statement, while acknowledging the strait’s reopening, did not specify new procedures and expressed gratitude to shipowners and captains adhering to Iranian regulations.
In the wake of these developments, European stock markets rallied, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 rising by 3%, and Germany’s Dax increasing by 2.1%. The MSCI’s All-Country World Index also reached a new high, alongside its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which rose by 2.5%, reflecting investor optimism amid the evolving geopolitical landscape.
