Global markets reacted as oil prices dropped and stock markets climbed following President Donald Trump’s comments indicating that the conflict with Iran could soon conclude. Trump suggested that the Strait of Hormuz, a vital waterway for global oil transport, would be accessible to all nations, including Iran, if Tehran reached an agreement with Washington. In a social media post, 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.”
However, Trump cautioned that failure to secure a deal with Iran would lead to escalated military actions. He warned that “the bombing starts” and it would be more intense than previous measures. This announcement followed his decision to temporarily halt the “Project Freedom” operation, which involved escorting vessels through the Strait of Hormuz. The strait, responsible for a significant portion of the world’s oil supply, has been under an Iranian blockade since February, contributing to a global energy crisis. Despite the pause, Trump maintained that the blockade of Iranian ports would continue. In response, Iran’s Revolutionary Guards’ Navy stated that with US threats subsiding and new procedures implemented, safe passage through the strait would be assured.
The announcement resulted in a sharp decline in Brent crude oil prices, which dropped 11% to $97 a barrel, marking its first dip below $100 since April. Similarly, wholesale gas prices fell, with the British June contract dropping 6.3% to 107.8p a therm. Improved prospects for international travel led to a rise in airline stocks. The decline in oil prices gained momentum following reports suggesting the White House was nearing an agreement to end hostilities with Iran, as per a memorandum of understanding. The report, which cited multiple sources including US officials, indicated that both parties were ready to establish a framework for more detailed nuclear negotiations.
Despite the initial drop, oil prices later recovered some ground, trading down 7.3% at $101.83 a barrel after Iran dismissed the notion as an “American wishlist [and] not a reality.” The Revolutionary Guards’ statement did not elaborate on the new procedures but expressed gratitude to shipowners and captains for complying with Iranian regulations in the strait. The previous week had seen oil prices surge to $126 a barrel, the highest since 2022, amidst concerns that the US blockade of Iranian ports could extend for months amid stalled peace talks.
Stock markets across Europe responded positively to the developments. The UK’s FTSE 100 index increased by 2%, while France’s Cac 40 and Germany’s Dax rose by 3% and 2.1%, respectively. Global indices also saw milestones, with MSCI’s All-Country World Index rising 1.6% to a new record, along with gains in its emerging markets benchmark and a broad index of Asia Pacific shares outside Japan, which climbed 2.5%.