Global oil prices dropped and stock markets experienced gains following President Donald Trump’s announcement that the conflict with Iran could come to an end, potentially reopening the crucial Strait of Hormuz to international passage if Tehran reaches an agreement with Washington. On social media, 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, he warned that failure to reach a deal would result in intensified military action, stating that “the bombing starts” and would escalate beyond previous levels.
Trump’s comments surfaced shortly after he declared a temporary halt to his “Project Freedom” operation, which involved escorting ships through the Strait of Hormuz. This strategic waterway, which facilitates the passage of about 20% of the world’s oil supply, has been under an Iranian blockade since February, leading to a global energy crisis. Although the operation is paused to finalize negotiations with Iran, Trump emphasized that the blockade of Iranian ports will persist. In response, Iran’s Revolutionary Guards’ Navy indicated that safe passage through the strait would be assured as American threats diminish and new procedures are implemented.
Following these developments, Brent crude oil prices, which had surged earlier in the week due to Middle Eastern tensions, plummeted by 11% to $97 a barrel—the first time it fell below $100 since April 22. Wholesale gas prices also declined, with the British June contract dropping by 6.3% to 107.8p a therm, while airline stocks rose on the improved outlook for international travel. The downward momentum of oil prices accelerated after reports suggested that the White House was nearing a one-page memorandum of understanding with Iran to end hostilities, setting the stage for more comprehensive nuclear discussions.
Despite this initial downturn, oil prices moderated later in the day, with Brent crude trading down 7.3% at $101.83 a barrel. Iran dismissed the purported agreement as an “American wishlist [and] not a reality.” The Revolutionary Guards did not elaborate on the newly proposed procedures for the strait but expressed gratitude to shipowners and captains for adhering to Iranian regulations during their transit.
In financial markets, European stocks climbed, with the UK’s FTSE 100 index rising by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax gaining 2.1%. Meanwhile, MSCI’s All-Country World Index reached a new record high, advancing by 1.6%, alongside significant increases in its emerging markets index and the broad Asia Pacific shares index outside Japan, which grew by 2.5%.