Oil prices experienced a decline while stock markets saw gains following President Donald Trump’s announcement regarding the potential conclusion of the conflict with Iran. Trump expressed optimism that the Strait of Hormuz could remain accessible to international passage if Tehran agrees to terms with Washington. In a social media statement, Trump mentioned that assuming Iran fulfills previous agreements, the conflict termed as “Epic Fury” would conclude, and the blockade would facilitate open access to the Strait of Hormuz, benefiting all parties, including Iran.
Despite this potential breakthrough, Trump issued a stark warning that failure to reach a deal with Iran would result in intensified military actions. This development occurred after Trump’s decision to temporarily halt his “Project Freedom” initiative, which has been escorting ships through the strategically important strait. The Strait of Hormuz, responsible for carrying approximately 20% of the world’s oil supplies, has faced an Iranian blockade since February, exacerbating a global energy crisis. Trump indicated that the pause in operations is intended to allow for the finalization of a deal with Tehran, although the blockade on Iranian ports remains in effect. Iran’s Revolutionary Guards’ Navy responded by assuring safe transit through the strait with new procedures, marking their first reaction to the U.S. suspension of operations designed to assist stranded ships.
The announcement initially caused a significant drop in Brent crude oil prices, which plummeted 11% to $97 a barrel, marking the first time prices fell below $100 since April 22. Wholesale gas prices also decreased, with the British June contract dropping 6.3% to 107.8p a therm, while airline stocks rose amid improved prospects for international travel. The decline in crude prices accelerated following reports that the White House was nearing a one-page memorandum of understanding to end the conflict with Iran. The report suggested both parties were prepared to establish a framework for detailed nuclear discussions, with sources including U.S. officials contributing this information.
However, oil prices later regained some losses, trading down 7.3% at $101.83 a barrel as Iran dismissed the possibility of a deal as merely an “American wishlist.” The statement from Iran’s Revolutionary Guards did not specify the new procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations while navigating the strait. The oil price had previously soared to $126 a barrel last week, its highest level since 2022, after Trump indicated that the blockade on Iranian ports could persist for months amid stalled peace talks.
European stock markets responded positively on Wednesday, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax advancing by 2.1%. Globally, MSCI’s All-Country World Index rose 1.6% to a new record, alongside similar achievements for its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which increased by 2.5%.
