Oil prices experienced a significant drop while stock markets surged following President Donald Trump’s announcement that hostilities with Iran could conclude and the Strait of Hormuz would be accessible to all, contingent upon Tehran reaching an agreement with Washington. Trump communicated via social media, indicating that if Iran upholds its commitments, the conflict termed “Epic Fury” would cease, and the blockade strategy would permit open passage through the crucial strait, which is vital for global oil transit.
Despite the optimistic tone, Trump cautioned that failure on Iran’s part to negotiate would lead to an escalation in military actions, potentially surpassing previous levels of intensity. This announcement came amid Trump’s decision to temporarily halt “Project Freedom,” a naval operation designed to facilitate safe passage for ships through the Strait of Hormuz. This waterway, responsible for transporting about 20% of the world’s oil, has been under Iranian blockade since February, contributing to a global energy crisis. The Revolutionary Guards’ Navy in Iran responded by assuring safe passage through the strait, suggesting new procedures would be implemented as U.S. threats diminish.
The immediate impact on global markets was notable, with Brent crude oil prices plunging by 11%, reaching a low of $97 per barrel, marking the first sub-$100 level since April 22. Wholesale gas prices also saw a decline, with the British June contract dropping by 6.3%. Meanwhile, airline stocks benefited from an improved outlook for international travel, buoyed by the prospect of eased tensions. The early decline in crude prices gained momentum following a report that the White House was nearing a memorandum of understanding with Iran to conclude the conflict, setting the stage for more comprehensive nuclear negotiations.
Later in the day, oil prices moderated their losses, settling at $101.83 a barrel, as Iran described the U.S. proposals as an “American wishlist” rather than a concrete reality. The exact nature of the new procedures for safe passage through the Strait of Hormuz remains unspecified, but the Iranian Guards expressed gratitude toward shipowners and captains for adhering to local regulations. This development follows a period when oil prices peaked at $126 a barrel, their highest since 2022, amid prolonged U.S. port blockades and stalled peace discussions.
European stock markets responded positively to the unfolding events, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 gaining 3%, and Germany’s Dax increasing by 2.1%. Globally, MSCI’s All-Country World Index rose 1.6% to a new high, reflecting similar achievements in emerging markets and Asia Pacific shares outside Japan, which advanced by 2.5%.