In a significant development, oil prices experienced a decline and stock markets saw an upswing following U.S. President Donald Trump’s announcement that the conflict with Iran could conclude, potentially reopening the Strait of Hormuz to all, including Iran, contingent upon a deal being struck. Trump took to social media to assert that if Iran adheres to previously agreed terms, the ongoing confrontation labeled ‘Epic Fury’ would conclude, allowing for the highly effective blockade to permit free passage through the Strait of Hormuz. However, he cautioned that failure to reach an agreement would result in escalated military actions against Iran.
This statement came in the wake of Trump’s decision to temporarily pause the ‘Project Freedom’ operation, which had been protecting vessels navigating the strait—a critical passageway for about 20% of global oil supplies—since Iran implemented a blockade in late February, inciting a worldwide energy crisis. Although the U.S. has paused its operations to facilitate negotiations with Tehran, the blockade of Iranian ports remains intact. In response, Iran’s Revolutionary Guards’ Navy indicated that new procedures would ensure safe passage through the strait, marking Iran’s initial reaction to the U.S. pausing its operations aimed at aiding ships stranded in the region.
The news initially caused Brent crude oil prices to plummet by 11%, dropping to $97 per barrel, marking the first dip below $100 since April 22. The decline in oil prices was mirrored by a fall in wholesale gas prices, with the British June contract dropping 6.3% to 107.8p per therm. Meanwhile, airline stocks benefited from the improved outlook for international travel. The falling trend in crude prices was exacerbated by reports suggesting that the U.S. and Iran were nearing a memorandum of understanding to end the conflict, with both sides prepared to establish a framework for future nuclear discussions.
Despite the initial optimism, oil prices partially recovered later in the day, trading at $101.83 per barrel after Iran dismissed the proposed agreement as merely an “American wishlist” rather than a feasible reality. The Revolutionary Guards’ statement did not elaborate on the new procedures for the strait but expressed gratitude to shipowners and captains for adhering to Iranian regulations during transit.
European stock markets responded positively to the developments, with the UK’s FTSE 100 index rising by 2%, France’s Cac 40 up by 3%, and Germany’s Dax increasing by 2.1%. Additionally, MSCI’s All-Country World Index reached a new record, climbing 1.6%, alongside notable gains in its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.