Oil prices saw a decline and stock markets experienced a rise as President Donald Trump announced that tensions with Iran could conclude with the reopening of the strategic Strait of Hormuz, should Tehran agree to a deal with Washington. Trump took to social media to express that if Iran adheres to previously discussed terms, the conflict, referred to as “Epic Fury,” would end, and the blockade that has restricted access to the strait would be lifted, allowing passage for all, including Iran.
Trump also warned that failure to reach an agreement with Iran would lead to an escalation of military actions at a greater intensity than before. His remarks followed a decision to temporarily halt “Project Freedom,” an operation aimed at escorting ships through the Hormuz Strait, which has been a critical channel for about 20% of the world’s oil supply but has faced blockades by Iran since February, sparking a global energy crisis. Despite the pause in escort operations, Trump confirmed that the blockade on Iranian ports would continue.
In response, Iran’s Revolutionary Guards’ Navy indicated that safe passage through the strait would be secured with the cessation of U.S. threats and the introduction of new procedures, marking Iran’s first reaction to the U.S. suspension of operations meant to aid stranded ships. This development initially caused Brent crude oil prices to drop significantly by 11% to $97 per barrel, falling below the $100 mark for the first time since April 22. Wholesale gas prices also declined, benefiting airline stocks due to the potential for improved international travel prospects.
The oil market’s decline accelerated following reports that the White House was nearing a preliminary agreement with Iran to end the conflict. The report suggested that both sides were preparing to establish a framework for more comprehensive nuclear discussions. However, the dip in oil prices moderated later, with Brent crude trading down 7.3% at $101.83 per barrel after Iran dismissed the supposed agreement as an “American wishlist” rather than a concrete reality.
Global stock markets reacted positively to these developments. European indices such as the UK’s FTSE 100, France’s Cac 40, and Germany’s Dax all saw gains, with the FTSE 100 rising by 2%, the Cac 40 by 3%, and the Dax by 2.1%. Additionally, MSCI’s All-Country World Index climbed to a new record, increasing by 1.6%, alongside similar gains in its emerging markets benchmark and the Asia Pacific shares index outside of Japan, which rose by 2.5%.