Oil prices saw a decline while stock markets experienced an upswing following remarks from Donald Trump indicating that the conflict with Iran could conclude, allowing the Strait of Hormuz to be accessible to all nations if Iran reaches an agreement with the United States. The US president expressed on social media that if Iran consents to the terms previously discussed, which he noted might be a significant assumption, the renowned operation dubbed Epic Fury would come to a close. Moreover, the effective blockade would permit the Strait of Hormuz to remain open, including for Iran.
However, Trump warned that without a deal, military actions would escalate, with bombing resuming at higher intensity and severity than before. His statement followed an announcement to temporarily halt “Project Freedom,” an operation focused on escorting vessels through the strategically vital strait, which has been under Iranian blockade since late February, causing a worldwide energy crisis. Trump mentioned the brief suspension was to allow for negotiations with Tehran, although the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy indicated that safe passage through the strait would be reinstated as US threats recede, and new measures are implemented, marking their first response to the US’s operational pause.
The developments initially caused Brent crude oil prices to plummet by 11%, reaching as low as $97 per barrel, marking the first time they fell below $100 since April 22. Wholesale gas prices also decreased, with the British June contract dropping by 6.3% to 107.8p per therm. Airline stocks benefited from improved prospects for international travel. This movement in oil prices was further influenced by a report suggesting the White House was nearing a one-page memorandum of understanding to terminate the conflict with Iran, with both sides preparing to establish a framework for detailed nuclear discussions. The report cited multiple sources, including two US officials.
Nevertheless, oil prices rebounded slightly later in the day, with Brent trading down 7.3% at $101.83 per barrel after Iran dismissed the US proposal as merely an “American wishlist” rather than a reality. The statement from the Iranian Guards did not elaborate on the new procedures but acknowledged the compliance of shipowners and captains with Iranian regulations during navigation through the strait.
Last week, oil prices had peaked at $126 per barrel, a record since 2022, following Trump’s declaration that the US blockade could extend for months amid stalled peace negotiations. European stock markets responded positively, with the UK’s FTSE 100 index increasing by 2%, France’s Cac 40 rising by 3%, and Germany’s Dax climbing by 2.1%. Additionally, MSCI’s All-Country World Index advanced by 1.6% to a new high, alongside similar achievements in its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.