In a significant development, oil prices dropped and stock markets saw an upswing as President Donald Trump announced the potential conclusion of hostilities with Iran, alongside the reopening of the Strait of Hormuz if Tehran agrees to a deal with Washington. Trump took to social media to declare that assuming Iran complies with previously agreed terms, the “Epic Fury” would conclude, and the blockade would facilitate open access to the crucial waterway, including for Iran. However, he warned that failure to reach a deal would lead to intensified military actions against Iran.
This announcement follows Trump’s decision to temporarily halt “Project Freedom,” a US operation designed to escort ships through the Strait of Hormuz. This strategic chokepoint, vital for the transportation of about 20% of the world’s oil supply, has been under an Iranian blockade since February, exacerbating the global energy crisis. Despite the pause, Trump emphasized that the blockade of Iranian ports would persist. In response, the Iranian Revolutionary Guards’ Navy assured safe passage through the strait, marking their first acknowledgment of the US’s operational pause intended to assist stranded vessels.
The immediate market reaction saw Brent crude oil, which had surged by 6% earlier in the week due to escalating tensions in the Middle East, plummet by 11%, dipping to $97 a barrel—its lowest since April 22. Similarly, wholesale gas prices followed suit, with the British June contract declining by 6.3% to 107.8p per therm. This movement came as reports surfaced suggesting the White House was nearing a one-page memorandum with Iran to potentially end the conflict, setting the stage for detailed nuclear discussions.
However, oil prices later regained some ground, with Brent crude trading at $101.83 a barrel, marking a 7.3% decline, as Iran dismissed the US’s proposal as merely an “American wishlist” rather than a tangible agreement. Meanwhile, the Revolutionary Guards’ announcement did not detail the new measures but expressed gratitude to shipowners and captains for adhering to Iranian regulations in the waterway.
On the financial front, European stock markets experienced a notable rally. The UK’s FTSE 100 index rose by 2%, France’s Cac 40 increased by 3%, and Germany’s Dax saw a 2.1% uptick. Additionally, MSCI’s All-Country World Index set a new record with a 1.6% rise, alongside significant gains in its emerging markets benchmark and the broadest measure of Asia Pacific shares outside Japan, which climbed by 2.5%.