In a significant development, oil prices dropped and stock markets surged as President Donald Trump announced that the conflict with Iran could conclude if Tehran agrees to a deal with Washington, ensuring the Strait of Hormuz remains “open to all.” Trump’s message on social media suggested that if Iran consents to the previously agreed terms, the conflict, which he dubbed the “Epic Fury,” would end, and the blockade allowing the strait to be accessible, including to Iran, would be lifted. However, he added a stern warning that without a deal, intensified bombing could commence.
This announcement followed Trump’s decision to temporarily pause the “Project Freedom” operation, which involves escorting ships through the crucial Strait of Hormuz. This waterway, vital for oil transport, has been blockaded by Iran since February, contributing to a global energy crisis. The president mentioned that this pause would be brief to finalize negotiations with Tehran, while maintaining the blockade on Iranian ports. Iran responded through state media, with the Revolutionary Guards’ Navy assuring safe passage through the strait as US threats diminished and new procedures were implemented.
The news initially caused Brent crude oil prices to plummet by 11%, reaching as low as $97 a barrel, marking its first dip below $100 since April 22. Meanwhile, wholesale gas prices and airline stocks responded positively, with the British June gas contract falling 6.3% and airline stocks rising due to improved prospects for international travel. Earlier in the day, a report suggesting a potential close agreement between the US and Iran on a memorandum of understanding to end hostilities further influenced market movements, although Iran later dismissed it as merely an “American wishlist.”
Throughout the day, oil prices partially recovered, trading down 7.3% at $101.83 a barrel, following Iran’s skepticism about the proposed agreement. The Revolutionary Guards did not clarify the new procedures for strait transit but expressed gratitude to shipowners and captains for adhering to Iranian regulations. Just last week, oil prices had surged to $126 a barrel, the highest since 2022, amid stalled peace talks and the US blockade threats.
European stock markets experienced a robust rally, with the UK’s FTSE 100 index increasing by 2%, France’s Cac 40 rising by 3%, and Germany’s Dax climbing 2.1%. Additionally, MSCI’s All-Country World Index reached a new peak, rising 1.6%, alongside gains in its emerging markets benchmark and a broad index of Asia Pacific shares outside Japan, which advanced by 2.5%.