Oil prices experienced a significant drop while stock markets saw an upswing following President Donald Trump’s announcement regarding the potential end of hostilities with Iran. Trump suggested that the strategic Strait of Hormuz would be accessible to all nations, including Iran, if Tehran agrees to a deal with Washington. On social media, Trump stated that should Iran fulfill its commitments, the conflict known as Epic Fury would conclude, and the blockade currently affecting the Hormuz Strait would cease, allowing free passage.
Despite this optimistic message, Trump issued a stark warning that failure to reach an agreement would result in intensified military action against Iran. This development comes in the wake of Trump’s decision to temporarily halt “Project Freedom,” an operation designed to escort vessels through the strait, which has been under Iranian blockade since February. This blockade has significantly impacted global energy markets, as approximately 20% of the world’s oil supply passes through this critical maritime route. Trump emphasized that although the escort operation would pause briefly to facilitate negotiations, the blockade of Iranian ports would persist.
In response to these developments, Brent crude oil prices, which had previously surged due to recent Middle Eastern conflicts, plummeted by 11%, dropping below the $100 mark for the first time since April. Wholesale gas prices also declined, with the British June contract falling by 6.3%. The dip in oil prices coincided with a report suggesting that the U.S. and Iran were close to formalizing a preliminary agreement to conclude their ongoing conflict. The report indicated that both parties were prepared to establish a framework for further nuclear discussions, although Iran later dismissed the notion as an “American wishlist.”
Iran’s Revolutionary Guards’ Navy indicated that safe passage through the Strait of Hormuz would be assured following the cessation of U.S. threats, although details on new procedures were not disclosed. The statement acknowledged the cooperation of shipowners and captains in adhering to Iranian regulations. Despite the initial decline, oil prices recovered slightly, closing the day at $101.83 per barrel, as skepticism about the U.S.-Iran agreement persisted.
Meanwhile, European stock markets responded positively to the news. The UK’s FTSE 100 index rose by 2%, while France’s Cac 40 and Germany’s Dax saw increases of 3% and 2.1%, respectively. On a global scale, MSCI’s All-Country World Index achieved a new record with a 1.6% rise, accompanied by gains in emerging markets and Asia Pacific shares outside Japan, which climbed by 2.5%.