Global oil prices dropped and stock markets experienced a rise following President Donald Trump’s remarks suggesting that the conflict with Iran might soon conclude, potentially reopening the Strait of Hormuz if Tehran agrees to a deal with Washington. Trump communicated via social media, expressing that if Iran adheres to previously discussed agreements, the “legendary Epic Fury” would end, and the effective blockade would permit access to the Hormuz Strait for all, including Iran. Nevertheless, he cautioned that failure to reach an agreement would result in intensified bombing.
This development comes after Trump announced a temporary halt to the “Project Freedom” initiative, which involved escorting ships through the strategically crucial strait responsible for nearly 20% of the world’s oil supply. Since February, Iran’s blockade of the strait has exacerbated the global energy crisis. Although the escort operation is on pause for negotiations with Tehran, the blockade of Iranian ports remains intact. In reaction, Iran’s Revolutionary Guards’ Navy indicated their commitment to ensuring safe transit through the strait, noting the cessation of U.S. threats and the implementation of new procedures.
The announcement initially caused Brent crude oil prices to plummet by 11%, reaching a low of $97 per barrel, marking the first dip below $100 since April 22. Wholesale gas prices followed suit, with the British June contract declining by 6.3% to 107.8p a therm. Airline stocks surged due to the improved outlook for international travel. Despite a report suggesting the White House was nearing a memorandum of understanding to end the conflict with Iran, oil prices rebounded slightly, closing down 7.3% at $101.83 per barrel, as Iran dismissed the notion as merely an “American wishlist.”
In the preceding week, oil prices had soared to $126 a barrel, the highest since 2022, amid speculation that the U.S. blockade of Iranian ports could extend for months, with peace talks at a stalemate. The Revolutionary Guards’ statement regarding the strait did not elaborate on the new procedures, but expressed gratitude to shipowners and captains for adhering to Iranian regulations while navigating the waterway.
European stock markets reacted positively, with the UK’s FTSE 100 index increasing by 2%, France’s Cac 40 rising by 3%, and Germany’s Dax climbing by 2.1%. The MSCI’s All-Country World Index also saw a 1.6% rise to a new record, alongside corresponding gains in its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.