Global oil prices experienced a significant drop while stock markets saw a rise following comments from Donald Trump indicating a potential end to the conflict with Iran. The U.S. President announced that the strategic Strait of Hormuz would be accessible to all if Tehran agrees to a deal with Washington. Trump took to social media to express that, assuming Iran consents to the previously agreed terms, the military operation known as Epic Fury would be concluded, and the blockade would permit open access to the strait, even for Iran.
Despite this prospect, Trump warned that if Iran does not agree to a deal, military actions would escalate to a greater intensity than before. This announcement came shortly after Trump declared a temporary halt to the “Project Freedom” mission, which involved escorting ships through the vital waterway that accounts for around 20% of global oil supplies. Iran has maintained a blockade of the strait since late February, contributing to an energy crisis worldwide. Trump’s pause in operations aims to negotiate a deal with Tehran, although the blockade of Iranian ports remains.
The Revolutionary Guards’ Navy responded to the U.S. decision by ensuring safe passage through the strait and implementing new procedures to end the threats. The announcement led to a sharp decline in Brent crude oil prices, which fell by 11% to $97 per barrel, marking its first drop below $100 since April 22. Wholesale gas prices also saw a decline, with the British June contract decreasing by 6.3%. Meanwhile, airline stocks benefited from the improved outlook for international travel. Reports suggested that the White House was nearing a memorandum of understanding with Iran to conclude the conflict, though Iranian officials dismissed this as an “American wishlist.” As a result, oil prices partially recovered later, trading at $101.83 a barrel.
In financial markets, European stocks rallied on the news. The UK’s FTSE 100 index increased by 2%, France’s Cac 40 climbed 3%, and Germany’s Dax rose 2.1%. The MSCI All-Country World Index reached a new record, rising by 1.6%, alongside similar achievements in emerging markets and the Asia Pacific shares index, excluding Japan, which gained 2.5%.
Prior to Trump’s statement, oil prices had surged to $126 a barrel, the highest since 2022, due to concerns that the U.S. blockade of Iranian ports could continue for months amid stalled peace talks. The Guards did not elaborate on the new procedures for the strait but expressed gratitude to shipowners and captains for adhering to Iranian regulations while navigating the waterway.