Oil prices experienced a decline while stock markets saw an uptick following President Donald Trump’s announcement regarding potential de-escalation with Iran. Trump stated that the ongoing conflict with Iran could come to an end if Tehran agrees to a deal with Washington, which would also lead to the reopening of the Strait of Hormuz. He expressed this sentiment on social media, suggesting that if Iran adheres to the previously agreed terms, the conflict, referred to as Epic Fury, would conclude, thus allowing free passage through the crucial waterway.
The president also issued a stark warning that failure to reach an agreement would result in intensified military action, with bombing resuming at a significantly higher scale. This statement followed his decision to temporarily pause “Project Freedom,” a U.S. operation that has been escorting ships through the strait. This strategic waterway, responsible for transporting about 20% of the world’s oil, has been under Iranian blockade since February, sparking a global energy crisis. Trump clarified that while the escort operation would be halted briefly to finalize discussions with Iran, the blockade of Iranian ports would persist.
The initial impact of Trump’s comments was evident in the oil markets, with Brent crude oil prices plummeting by 11%, reaching $97 per barrel, marking the first instance of prices dropping below $100 since late April. Meanwhile, wholesale gas prices in Britain also decreased, and airline stocks surged, buoyed by the prospect of improved international travel conditions. The decline in crude prices was further accelerated by reports indicating that the White House was nearing an agreement on a memorandum of understanding to end hostilities with Iran, paving the way for detailed nuclear negotiations.
However, oil prices later regained some ground, trading at $101.83 per barrel after Iran dismissed the proposed agreement as merely an “American wishlist” rather than a concrete reality. The Iranian Revolutionary Guards’ statement did not detail the new measures for ensuring safe passage through the strait, but it expressed gratitude to shipowners and captains for adhering to Iranian regulations.
European stock markets responded positively to these developments, with notable gains recorded across major indices. The UK’s FTSE 100 index rose by 2%, while France’s Cac 40 and Germany’s Dax increased by 3% and 2.1%, respectively. The MSCI All-Country World Index also reached a new record, rising by 1.6%, alongside similar achievements for its emerging markets benchmark and a broad Asia Pacific shares index, excluding Japan, which climbed by 2.5%.