Oil prices experienced a decline while stock markets saw an uptick following President Donald Trump’s announcement that hostilities with Iran could conclude, allowing the Strait of Hormuz to become accessible to all nations if Tehran reaches an agreement with Washington. Trump conveyed via social media that the end of the conflict, which he referred to as “Epic Fury,” would be contingent on Iran fulfilling previously agreed terms. He emphasized that under such conditions, the blockade enabling the Hormuz Strait to remain open would include access for Iran. However, he warned that failure to reach a deal would result in intensified military actions.
This development comes after Trump declared a temporary halt to the “Project Freedom” initiative, which involves escorting vessels through the strategically critical strait. This waterway is responsible for transporting approximately 20% of the world’s oil supply and has been under an Iranian blockade since late February, contributing to a significant energy crisis globally. The president stated that the operation’s pause would be brief to facilitate negotiations with Tehran, although the blockade of Iranian ports would persist. In response, the Iranian Revolutionary Guards’ Navy stated that the transit through the strait would be secured with the cessation of U.S. threats and the introduction of new protocols.
The initial news led to a steep decline in Brent crude oil prices, which dropped by 11% to reach as low as $97 per barrel—the first instance it fell below the $100 mark since April 22. This decline followed an initial rise of up to 6% earlier in the week due to recent Middle East attacks. Wholesale gas prices also decreased, with the British June contract falling by 6.3% to 107.8p per therm. Airline stocks benefited from the improved outlook for international travel. The downward trend in crude oil prices was further spurred by reports suggesting that the White House was close to finalizing a memorandum of understanding to end the conflict with Iran, hinting at a potential framework for future nuclear discussions.
Despite initial losses, oil prices partially recovered later in the day, trading down 7.3% at $101.83 per barrel, as Iran dismissed the prospective agreement as merely an “American wishlist” rather than a concrete reality. The Iranian Guards’ statement did not detail the new procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations while navigating the strait. Previously, oil prices had surged to $126 a barrel—the highest since 2022—following Trump’s remarks that the blockade of Iranian ports could extend for several months amidst stalled peace talks.
European stock markets responded positively to the developments, with the UK’s FTSE 100 index rising by 2%, France’s Cac 40 gaining 3%, and Germany’s Dax increasing by 2.1%. Additionally, MSCI’s All-Country World Index climbed 1.6% to reach a new record, mirroring similar achievements for its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which advanced by 2.5%.