Oil prices took a significant dip and stock markets saw gains following President Donald Trump’s announcement that the conflict with Iran might conclude and the strategic Strait of Hormuz could be accessible to all if Tehran reaches an agreement with Washington. On social media, Trump stated, “Assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption, the already legendary Epic Fury will be at an end, and the highly effective Blockade will allow the Hormuz Strait to be OPEN TO ALL, including Iran.” Despite this optimistic outlook, he warned that without a deal, military actions would escalate, with bombings at a higher intensity than before.
The announcement followed Trump’s decision to momentarily pause “Project Freedom,” an operation aimed at escorting ships through the strait, which is a critical channel for about one-fifth of the world’s oil supply and has been under Iranian blockade since late February, leading to a global energy crisis. The president emphasized that while the operation is on hold to finalize talks with Tehran, the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy indicated that safe transit through the strait would be assured, citing the end of U.S. threats and the implementation of new procedures. This marked Iran’s first reaction to the U.S. pausing its operations designed to assist stranded ships.
Initially, the news caused Brent crude oil prices to plummet by 11%, dropping to as low as $97 a barrel, marking the first time it fell below $100 since April 22. Wholesale gas prices saw a similar decline, with the British June contract falling by 6.3% to 107.8p a therm. Airline stocks benefited from the improved outlook for international travel. Earlier, the crude price was already on a downward trend, which accelerated after reports suggested the White House was nearing a one-page memorandum of understanding to end the conflict with Iran, potentially paving the way for more detailed nuclear talks. However, the oil price later recovered some losses, trading down 7.3% at $101.83 a barrel, as Iran dismissed the report as an “American wishlist [and] not a reality.”
Despite the uncertainty, European stock markets rallied on the news. The UK’s FTSE 100 index rose by 2%, France’s Cac 40 increased by 3%, and Germany’s Dax was up by 2.1%. In the broader market, MSCI’s All-Country World Index rose by 1.6% to a new record, with similar gains observed in its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which climbed by 2.5%.
Previously, oil prices had surged to $126 a barrel, the highest since 2022, after Trump’s declaration that the U.S. blockade of Iranian ports could be prolonged for months amid stalled peace negotiations. The statement from the Revolutionary Guards did not provide specifics on the new procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations while navigating the waterway.