Oil prices saw a significant drop while global stock markets experienced an upswing following statements from Donald Trump indicating an end to the conflict with Iran might be near. The former US president suggested on social media that if Iran agreed to a deal with Washington, the ongoing “Epic Fury” would conclude, and the Strait of Hormuz, a critical waterway for global oil transit, would be “open to all,” including Iran. However, Trump warned that failure to reach an agreement could result in intensified military actions.
The announcement came amid a temporary halt in Trump’s “Project Freedom,” which involved escorting ships through the Hormuz Strait. This passage, vital for carrying about one-fifth of the world’s oil supply, has been blockaded by Iran since late February, exacerbating global energy concerns. Trump mentioned that this pause was intended to finalize negotiations with Tehran, although the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy conveyed that safe passage through the strait would now be guaranteed as US threats were receding, marking Tehran’s first response to the US suspension of its operations.
Early reports of potential progress in US-Iran negotiations led to a sharp decline in Brent crude oil prices, which plummeted by 11% to $97 a barrel—the first drop below $100 since April 22. Similarly, wholesale gas prices fell, with the British June contract decreasing by 6.3% to 107.8p a therm. In contrast, airline stocks surged, buoyed by the prospect of improved international travel conditions. Despite the initial optimism, oil prices later rebounded slightly, standing at $101.83 a barrel, following Iran’s dismissal of the US claims as merely an “American wishlist.”
Market reactions were not confined to commodities alone. European stock indices responded positively, with the UK’s FTSE 100 rising by 2%, France’s Cac 40 gaining 3%, and Germany’s Dax climbing 2.1%. The MSCI’s All-Country World Index also reached a new record, increasing by 1.6%, alongside other milestones in its emerging markets benchmark and Asia Pacific shares, which rose by 2.5% outside Japan.
Just last week, oil prices had soared to $126 a barrel, the highest since 2022, driven by concerns over the US’s continued blockade of Iranian ports and the stalled peace talks. The latest developments have provided a glimmer of hope for resolution, although the specific measures for ensuring safe transit through the Strait of Hormuz remain unspecified, as noted in the Iranian Guards’ statement.