Oil prices experienced a decline while stock markets saw an uplift following a statement from Donald Trump indicating that the conflict with Iran could conclude and the Strait of Hormuz would remain accessible if Tehran consented to a deal with Washington. The U.S. President communicated via social media that, should Iran uphold the terms previously agreed upon, the conflict known as Epic Fury would cease, and the blockade would ensure the Strait of Hormuz remained open to all, including Iran. However, he cautioned that if no agreement was reached, military actions would resume at an increased level of intensity.
The announcement followed Trump’s decision to momentarily halt the “Project Freedom” initiative, which involved escorting ships through the Strait of Hormuz—a crucial passageway for approximately 20% of the global oil supply. The strait has been under an Iranian blockade since late February, leading to a worldwide energy predicament. The President stated the operation’s suspension was necessary to conclude negotiations with Tehran, although the blockade on Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy assured that safe passage through the strait would be guaranteed as U.S. threats receded, marking their initial reaction to the U.S. suspension of operations aimed at assisting stranded vessels.
Following these developments, Brent crude oil prices, which had previously surged by up to 6% earlier in the week amid escalating Middle Eastern tensions, plummeted by 11% to $97 per barrel, marking a drop below $100 for the first time since April 22. Concurrently, wholesale gas prices decreased, with the British June contract falling 6.3% to 107.8p a therm, and airline stocks rose due to the improved outlook for global travel. The decline in crude prices accelerated after reports suggested that the White House was nearing a preliminary agreement to end the conflict with Iran, aiming to establish a framework for more comprehensive nuclear negotiations.
Despite the initial downturn, oil prices later adjusted, diminishing losses to 7.3% and trading at $101.83 per barrel as Iran dismissed the proposed terms as an “American wishlist” rather than a concrete agreement. The Revolutionary Guards’ statement regarding the strait did not elaborate on the specifics of the new measures but acknowledged the cooperation of shipowners and captains adhering to Iranian regulations while navigating the waterway. Oil prices had previously peaked at $126 a barrel just last week, the highest since 2022, when Trump suggested that the U.S. blockade of Iranian ports could extend for several months amid stalled peace negotiations.
Meanwhile, European stock markets responded positively, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax rising 2.1%. Additionally, MSCI’s All-Country World Index experienced a 1.6% increase, achieving a new record alongside similar achievements by its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.
