In a significant development, oil prices have dropped while stock markets have surged following President Donald Trump’s remarks suggesting that the ongoing conflict with Iran could soon conclude. Trump indicated that the Strait of Hormuz, a critical passage for global oil supplies, might be accessible to all, contingent on Tehran reaching an agreement with Washington. On social media, Trump stated, “Assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption, the already legendary Epic Fury will be at an end, and the highly effective Blockade will allow the Hormuz Strait to be OPEN TO ALL, including Iran.” He further warned that if Iran fails to reach a deal, intensified bombing would commence.
The president’s comments followed his announcement to temporarily halt “Project Freedom,” an operation aimed at escorting ships through the strait, which Iran has blockaded since late February. This blockade has significantly impacted the global energy market, as the strait is responsible for transporting about 20% of the world’s oil supplies. Despite pausing the operation, Trump emphasized that the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy assured safe passage through the strait, signaling the end of U.S. threats and the implementation of new procedures.
Following the news, Brent crude oil prices, which saw a 6% rise earlier this week due to Middle Eastern tensions, fell by 11%, dropping to as low as $97 a barrel. This marked the first occurrence of prices falling below $100 since April 22. Similarly, wholesale gas prices decreased, with the British June contract declining 6.3% to 107.8p a therm. Airline stocks benefited from the prospect of improved international travel conditions. Initial reports suggested the White House neared a memorandum to conclude the conflict, with both nations set to devise a framework for further nuclear discussions.
Despite these developments, oil prices partially rebounded later in the day, with Brent crude trading down 7.3% at $101.83 per barrel following Iran’s dismissal of the deal as an “American wishlist [and] not a reality.” The Iranian Guards’ statement did not elaborate on the new procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations while transiting the waterway.
The recent turmoil had previously driven oil prices to $126 per barrel last week, the highest since 2022, amid concerns that the U.S. blockade on Iranian ports could persist for months. European stock markets experienced a positive reaction, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 rising 3%, and Germany’s Dax increasing 2.1%. The MSCI’s All-Country World Index also reached a new record, alongside similar achievements for its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.