Oil prices experienced a significant drop, while stock markets saw an upswing following Donald Trump’s announcement that the conflict with Iran could soon conclude, potentially reopening the strategic Strait of Hormuz to all parties. President Trump took to social media to express optimism, stating that should Iran comply with previously agreed terms—though acknowledging this as a significant assumption—the renowned Epic Fury operation would cease, and the effective blockade would lift, granting access to the strait for all nations, including Iran.
However, Trump warned that failure to reach an agreement would result in intensified military action, describing it as potentially more severe than prior incidents. This development comes on the heels of Trump’s decision to temporarily halt “Project Freedom,” a mission designed to escort vessels through the strait, which has been subject to an Iranian blockade since late February, exacerbating a global energy crisis. Despite this pause, Trump insisted on maintaining the blockade of Iranian ports. Iran’s Revolutionary Guards’ Navy responded, assuring safe passage through the strait following the cessation of US threats and the implementation of new procedures, marking their first official reaction to the US pause.
Amid these geopolitical shifts, Brent crude oil prices, which had surged by up to 6% earlier in the week due to escalating tensions in the Middle East, plummeted by 11%, reaching a low of $97 a barrel. This marked the first time since April 22 that prices fell below the $100 threshold. Meanwhile, wholesale gas prices also decreased, with the British June contract dropping 6.3% to 107.8p per therm. The potential for improved international travel prospects contributed to a rise in airline stocks. The initial decline in crude prices was further accelerated by reports indicating that the White House was nearing a one-page memorandum of understanding to end hostilities with Iran, potentially paving the way for more comprehensive nuclear discussions.
Despite these developments, oil prices later rebounded, with Brent crude trading down 7.3% at $101.83 a barrel after Iran dismissed the proposed agreement as merely an “American wishlist.” The Revolutionary Guards’ statement regarding new procedures for the strait did not provide specific details but expressed gratitude to shipowners and captains for adhering to Iranian regulations during transit.
In the financial markets, European stocks experienced a rally, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax rising by 2.1%. Additionally, MSCI’s All-Country World Index rose by 1.6% to achieve a new record, alongside similar milestones for its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which saw a 2.5% increase.