Oil prices experienced a significant drop while stock markets saw gains following a statement from Donald Trump that suggested the conflict with Iran could conclude, potentially reopening the Strait of Hormuz to all, contingent on Tehran reaching an agreement with Washington. The U.S. President took to social media, expressing that if Iran meets the agreed terms—although he acknowledged this might be a substantial assumption—the renowned operation, Epic Fury, would cease. Consequently, the effective blockade would lift, allowing access through the Hormuz Strait, including for Iran. However, Trump warned that failure to secure a deal would lead to a resumption of bombing at a heightened level and intensity.
These developments arose after Trump announced a temporary halt to “Project Freedom,” an initiative to escort ships through the strategically critical strait, which has been under an Iranian blockade since late February, leading to a worldwide energy crisis. Although operations have paused, the blockade on Iranian ports remains intact. Iran responded through a statement from the Revolutionary Guards’ Navy, indicating that safe passage through the strait would be assured following the cessation of U.S. threats and the implementation of new procedures. This marked Iran’s first official response to the U.S.’s operational pause aimed at assisting stranded ships in the region.
The announcement led to a sharp decline in Brent crude oil prices, which had previously surged by as much as 6% earlier in the week due to recent Middle Eastern conflicts. Prices plunged by 11%, reaching lows of $97 per barrel, marking the first dip below the $100 mark since April 22. Wholesale gas prices followed suit, with the British June contract decreasing by 6.3% to 107.8p a therm. The prospect of improved international travel boosted airline stocks. Initially, the oil price decline accelerated following a report suggesting that the White House was nearing a one-page memorandum of understanding to end the conflict with Iran, potentially setting the stage for detailed nuclear discussions. However, oil prices later recovered slightly, trading down 7.3% at $101.83 per barrel as Iran dismissed the U.S. proposal as merely a wishlist.
The Revolutionary Guards’ statement did not clarify the specifics of the new procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations while navigating the waterway. The oil price had previously peaked at $126 per barrel the previous week, its highest level since 2022, following Trump’s assertion that the U.S. blockade of Iranian ports could extend for months amid stalled peace negotiations.
Meanwhile, European stock markets experienced a rally, with the UK’s FTSE 100 index climbing by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax rising by 2.1%. MSCI’s All-Country World Index also advanced by 1.6% to reach a new record, alongside similar achievements for its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which saw a 2.5% increase.
