Oil prices took a sharp dive and stock markets experienced an upswing following President Donald Trump’s remarks indicating a potential end to hostilities with Iran. Trump suggested that the Strait of Hormuz, a crucial passage for global oil supplies, would be accessible to all, including Iran, provided Tehran agrees to a deal with Washington. He shared on social media that assuming Iran adheres to previously agreed terms—a significant assumption—the conflict, dubbed “Epic Fury,” would conclude, and the blockade on the strait would be lifted.
However, Trump cautioned that if Iran does not come to an agreement, military actions would escalate to a more severe level than before. This announcement followed his decision to temporarily pause “Project Freedom,” a mission aimed at escorting ships through the strait, which has been under blockade by Iran since February. This blockade has significantly impacted global energy markets. Despite the pause in operations, Trump maintained that the blockade of Iranian ports would continue. In response, Iran’s Revolutionary Guards’ Navy announced that transit through the strait would be safe with the cessation of US threats, marking the first official reaction since the US paused its escort operations.
The initial news led to a significant drop in Brent crude oil prices, which fell 11% to $97 a barrel, marking its first dip below $100 since April 22. Wholesale gas prices also declined, and airline stocks saw a boost due to the improved outlook for international travel. The downturn in crude prices was further fueled by reports suggesting that the US and Iran were nearing an agreement to end the conflict, potentially paving the way for more comprehensive nuclear negotiations. However, oil prices later recovered slightly, trading at $101.83 a barrel, as Iran dismissed these developments as an “American wishlist” rather than reality.
Iran did not detail what new procedures would be implemented in the strait but acknowledged the cooperation of shipowners and captains adhering to Iranian regulations. Oil prices had previously surged to $126 a barrel, their highest since 2022, amid prolonged US blockades and stalled peace negotiations.
European stock markets reacted positively to the developments, with the UK’s FTSE 100 index rising by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax climbing by 2.1%. MSCI’s All-Country World Index also reached a new peak, alongside gains in its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.