In a significant development, oil prices declined and stock markets witnessed an upturn following President Donald Trump’s announcement that the conflict with Iran could conclude, allowing the Strait of Hormuz to be accessible to all if Tehran reaches a deal with Washington. Trump conveyed via social media that assuming Iran adheres to previously agreed terms, the ongoing conflict termed “Epic Fury” would cease, and the blockade would facilitate open transit through the crucial waterway, including for Iran. However, he warned that without a deal, military actions would intensify.
This statement came as Trump announced a temporary halt to his “Project Freedom” initiative, which involved escorting vessels through the Strait of Hormuz. This strategic channel, responsible for transporting about 20% of global oil supplies, has been under Iranian blockade since late February, leading to an energy crisis worldwide. Trump clarified that while the escort operation would pause briefly to finalize negotiations with Tehran, the blockade on Iranian ports would persist. Meanwhile, Iran’s Revolutionary Guards’ Navy expressed readiness to ensure safe passage through the strait, marking their initial reaction to the U.S. decision to pause protective operations for stranded ships.
The news initially caused Brent crude oil prices, which had surged by 6% earlier due to Middle Eastern tensions, to plummet by 11%, reaching $97 per barrel—the first dip 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 benefited from the prospect of improved international travel conditions. The decline in crude prices was further accelerated by reports suggesting that the White House was nearing an agreement on a memorandum of understanding to end hostilities with Iran, potentially laying the groundwork for comprehensive nuclear discussions. However, later in the day, oil prices partially recovered, trading at $101.83 a barrel as Iran dismissed the U.S. proposals as an “American wishlist.”
The statement from the Iranian Guards did not detail the new procedures for safe passage but acknowledged the cooperation of shipowners and captains in adhering to Iranian regulations. The oil market had experienced a peak of $126 per barrel the previous week, the highest since 2022, when Trump suggested the U.S. blockade of Iranian ports might extend for months amid stalled peace negotiations.
European stock markets responded positively, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax rising by 2.1%. Additionally, MSCI’s All-Country World Index achieved a new record, increasing by 1.6%, alongside notable gains in its emerging markets benchmark and a broad index of Asia Pacific shares outside Japan, which advanced by 2.5%.