Oil prices experienced a decline while stock markets surged following a statement from President Donald Trump indicating a potential end to the conflict with Iran and the reopening of the Strait of Hormuz, should Tehran consent to an agreement with Washington. Trump took to social media to convey that the conclusion of what he referred to as the “already legendary Epic Fury” was contingent upon Iran adhering to previously agreed terms. He emphasized that if Iran complied, the “highly effective Blockade” would be lifted, allowing the Strait of Hormuz to be accessible to all, including Iran. However, he warned that failure to reach an agreement would result in intensified bombing campaigns.
The president’s remarks came on the heels of his decision to temporarily halt the “Project Freedom” operation. This operation involved escorting vessels through the strategically important strait, which is responsible for transporting about 20% of the world’s oil supplies. Iran had blockaded the strait since February, escalating a global energy crisis. Trump announced the temporary suspension to finalize negotiations with Tehran, although the blockade of Iranian ports would persist. In response, the Revolutionary Guards’ Navy indicated that safe passage through the strait would be assured once U.S. threats were withdrawn and new protocols established, marking Iran’s first response to the U.S. pausing its operations intended to assist stranded ships.
Following the news, Brent crude oil prices, which had surged by as much as 6% earlier in the week due to recent Middle East tensions, plummeted by 11%, reaching a low of $97 per barrel. This marked the first time prices fell below $100 since April 22. Concurrently, wholesale gas prices declined, with the British June contract dropping 6.3% to 107.8p per therm. Airline stocks benefited from the improved outlook for international travel. Earlier reports suggested that the White House was nearing a consensus on a preliminary one-page memorandum to cease hostilities with Iran, laying the groundwork for more comprehensive nuclear discussions.
However, oil prices later rebounded, reducing their loss to 7.3% and trading at $101.83 per barrel after Iran dismissed the proposal as an “American wishlist [and] not a reality.” The Revolutionary Guards did not disclose details regarding the new procedures for the strait but expressed gratitude to shipowners and captains for adhering to Iranian regulations while traversing the waterway. Last week, oil prices had reached $126 per barrel, their highest since 2022, amid concerns over the prolonged U.S. blockade of Iranian ports and stalled peace negotiations.
European stock markets saw a significant uplift, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 rising by 3%, and Germany’s Dax increasing by 2.1%. The MSCI’s All-Country World Index also advanced by 1.6%, reaching new heights alongside its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.
