Oil prices plummeted while stock markets surged following comments from Donald Trump indicating that the conflict with Iran could conclude and the Strait of Hormuz might be accessible to all if Tehran strikes a deal with Washington. The U.S. President took to social media to announce that should Iran agree to the terms previously discussed, the “Epic Fury” conflict would end, and the blockade would allow the Strait of Hormuz to be open to all, including Iran. However, Trump warned that without an agreement, military action would resume at an intensified level.
This development comes on the heels of Trump’s decision to temporarily pause “Project Freedom,” his initiative to escort ships through the crucial waterway that sees about 20% of the world’s oil supply but has been blockaded by Iran since February, sparking a global energy crisis. Although the blockade of Iranian ports remains, Trump expressed his intent to finalize a deal with Tehran. Iran’s Revolutionary Guards’ Navy responded, assuring that safe passage through the strait would be guaranteed with the cessation of U.S. threats and new guidelines being implemented.
Initially, the news caused a significant drop in Brent crude oil prices, which fell by 11% to $97 a barrel, marking the first time it dropped below $100 since April 22. In parallel, wholesale gas prices decreased, with the British June contract falling by 6.3% to 107.8p a therm. The aviation sector saw a boost with rising airline stocks, driven by the prospects of improved international travel. Earlier in the day, crude prices had already been declining, further accelerated by reports suggesting the White House was nearing a memorandum of understanding to end the conflict with Iran, though Iran later dismissed this as an “American wishlist.” By later in the day, oil had slightly recovered, trading at $101.83 a barrel.
The oil market had previously soared to $126 a barrel the previous week, its highest since 2022, amid concerns that the U.S. blockade of Iranian ports could extend for months while peace talks were at a standstill. The new statement from the Guards did not detail the new procedures but acknowledged the cooperation of shipowners and captains adhering to Iranian regulations in the strait.
Meanwhile, European stock markets experienced a rally, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 up by 3%, and Germany’s Dax increasing by 2.1%. The MSCI’s All-Country World Index also rose by 1.6%, reaching a new record, alongside significant gains in its emerging markets benchmark and the broad Asia Pacific shares index outside Japan, which saw a 2.5% rise.