Oil prices took a downward turn while stock markets saw a rise after President Donald Trump announced that tensions with Iran could come to an end, potentially opening the Strait of Hormuz to all, including Iranian vessels, if a deal with Tehran is reached. Trump shared on social media that if Iran adheres to previously agreed terms, the conflict, referred to as “Epic Fury,” would conclude, and the effective blockade would be lifted, allowing open passage through the crucial waterway.
The president also issued a stark warning that failure by Iran to come to an agreement would lead to intensified military actions, stating, “the bombing starts” with greater severity than before. This announcement followed his decision to temporarily halt the “Project Freedom” operation, which involves the escorting of ships through the Strait of Hormuz—a vital corridor for about 20% of the world’s oil supplies. This blockade by Iran since late February has contributed to a global energy crisis. Trump’s pause aims to finalize an agreement with Tehran, although the blockade of Iranian ports remains in place. In response, Iran’s Revolutionary Guards’ Navy assured that with the cessation of U.S. threats, safe passage through the strait would be maintained, though they did not elaborate on what new measures would be implemented.
In reaction to these developments, Brent crude oil prices, which had surged by as much as 6% earlier this week due to recent Middle East attacks, plummeted by 11% to around $97 per barrel, marking the first dip below $100 since April 22. Additionally, wholesale gas prices in Britain fell, with the June contract decreasing by 6.3% to 107.8p a therm. The market also saw a boost in airline stocks, driven by the prospect of improved conditions for international travel. A report suggested that the White House was nearing a memorandum of understanding to end hostilities with Iran, setting a framework for future nuclear discussions, which further influenced market movements.
Despite initial losses, oil prices later regained some ground, with Brent trading down 7.3% at $101.83 a barrel after Iran dismissed the potential agreement as an “American wishlist [and] not a reality.” As oil prices fluctuated, European stock markets experienced notable gains. The UK’s FTSE 100 index rose by 2%, France’s Cac 40 increased by 3%, and Germany’s Dax saw an uptick of 2.1%. Global indices reflected similar optimism, with MSCI’s All-Country World Index climbing 1.6% to a new record, accompanied by gains in its emerging markets and Asia Pacific benchmarks, excluding Japan, which increased by 2.5%.