In a significant development, oil prices dropped while stock markets experienced an upswing after President Donald Trump announced that the ongoing conflict with Iran could conclude if Tehran agreed to a deal with Washington. Trump took to social media, stating that if Iran adhered to the agreements in place, the conflict known as Epic Fury would end, and the blockade would allow free passage through the strategically important Strait of Hormuz, which Tehran had blockaded since late February. However, Trump warned that failing to reach an agreement would result in escalating military actions.
The president further revealed a temporary suspension of the “Project Freedom” operation, which was aimed at ensuring the safe passage of ships through the strait, a vital waterway that handles about 20% of global oil supplies. This operation had been initiated due to Iran’s blockade, which had triggered a global energy crisis. Trump clarified that this pause was intended to finalize a potential deal with Iran, although the blockade of Iranian ports would remain in effect. In response, the Iranian Revolutionary Guards’ Navy stated that they would guarantee safe transit through the strait, suggesting the end of U.S. threats and the implementation of new procedures.
This news significantly impacted global oil prices, with Brent crude oil plummeting by 11% to $97 a barrel, marking the first time it had fallen below $100 since April 22. Wholesale gas prices also saw a decline, with the British June contract dropping by 6.3%. The prospect of improved international travel led to a rise in airline stocks. The decline in oil prices accelerated following a report that the White House was nearing a one-page memorandum of understanding with Iran to end the conflict, potentially setting the stage for more detailed nuclear discussions.
Despite the initial drop, oil prices later rebounded slightly, with Brent crude trading at $101.83 a barrel after Iran dismissed the U.S. proposal as an “American wishlist.” The statement from the Revolutionary Guards did not detail the new procedures but expressed gratitude to shipowners and captains for complying with Iranian regulations while navigating the strait. Previously, oil prices had surged to $126 a barrel, the highest since 2022, amid stalled peace talks and the extended U.S. blockade.
European stock markets responded positively to these developments, with the UK’s FTSE 100 index climbing by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax rising by 2.1%. Additionally, the MSCI’s All-Country World Index hit a new record, alongside similar milestones for its emerging markets benchmark and its comprehensive index of Asia Pacific shares outside Japan, which saw a 2.5% increase.