Oil prices witnessed a significant decline while stock markets experienced an upswing following President Donald Trump’s announcement that the conflict with Iran could conclude if Tehran agrees to a deal with Washington. Trump assured that the Strait of Hormuz would remain accessible to all, contingent on an agreement. On social media, he noted, “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.”
The president cautioned that failure to reach a deal would result in intensified bombing, surpassing previous levels. His remarks came after a decision to temporarily halt the “Project Freedom” initiative, which aims at escorting ships through the strategically critical Strait of Hormuz—responsible for transporting approximately 20% of the world’s oil supply and under Iranian blockade since late February. Trump affirmed that while the operation would pause briefly to finalize negotiations, the blockade on Iranian ports would persist. Responding to the U.S. pause, Iran’s Revolutionary Guards’ Navy stated that safe passage through the strait would be ensured with new procedures, marking Iran’s initial reaction.
The announcement caused Brent crude oil prices, which had surged up to 6% earlier in the week due to Middle Eastern tensions, to plummet by 11%, dropping to $97 per barrel—the first time below $100 since April 22. Concurrently, wholesale gas prices decreased, with the British June contract falling 6.3% to 107.8p per therm. Airline stocks showed gains due to improved prospects for international travel. The downward trend in oil prices accelerated after news emerged that the White House was nearing a memorandum of understanding to end hostilities with Iran, potentially laying the groundwork for extensive nuclear discussions. However, oil prices later rebounded slightly, trading down 7.3% at $101.83 a barrel, as Iran dismissed the proposal as an “American wishlist [and] not a reality.”
The Revolutionary Guards did not elaborate on the specific measures to ensure secure passage through the Strait of Hormuz but expressed gratitude to shipowners and captains for adhering to Iranian regulations. Last week, oil prices had soared to $126 a barrel, the highest since 2022, following Trump’s statement about the possible extension of the U.S. blockade on Iranian ports and stalled peace talks.
European stock markets rallied in response to these developments, with the UK’s FTSE 100 index rising by 2%, France’s Cac 40 climbing 3%, and Germany’s Dax increasing by 2.1%. Globally, the MSCI All-Country World Index achieved a new record, rising 1.6%, accompanied by similar records in its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which saw a 2.5% rise.