In a significant development, oil prices tumbled while stock markets surged after President Donald Trump announced that the conflict with Iran could conclude, and the strategic Strait of Hormuz would be accessible to all if Tehran reached a deal with Washington. Trump took to social media to assert that if Iran adhered to the terms already discussed, the ongoing “Epic Fury” would come to an end, and the effective blockade would ensure that the Hormuz Strait remains open, even for Iran. However, he warned that if no agreement was reached, military actions would escalate to a more intense level.
The President’s remarks followed his decision to temporarily pause the “Project Freedom” operation, which involved escorting ships through the Strait of Hormuz. This waterway, critical for global oil supplies, has been under Iranian blockade since February, exacerbating the energy crisis worldwide. Although Trump mentioned the suspension was brief to finalize discussions with Tehran, he confirmed that the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy indicated that safe passage through the strait would be guaranteed with new procedures, marking Iran’s initial response to the US’s temporary cessation of its operations.
The impact of these announcements was felt in the energy markets, as Brent crude oil, which had experienced a surge of up to 6% earlier due to Middle Eastern tensions, plummeted by 11% to $97 a barrel, dipping below the $100 mark for the first time since April 22. Similarly, wholesale gas prices dropped, with the British June contract declining by 6.3% to 107.8p per therm. The report of potential progress towards a memorandum of understanding between the US and Iran further influenced market dynamics, with sources suggesting a readiness to outline a framework for detailed nuclear discussions.
Despite the initial decline, oil prices adjusted later, with losses narrowing to a 7.3% decrease, settling at $101.83 a barrel, following Iran’s dismissal of the US proposal as an “American wishlist” rather than a tangible agreement. The Iranian statement did not clarify the specifics of the new procedures for the strait but expressed gratitude to shipowners and captains for complying with Iranian regulations during transits.
Meanwhile, European stock markets showed robust growth, with the UK’s FTSE 100, France’s Cac 40, and Germany’s Dax indices climbing by 2%, 3%, and 2.1%, respectively. Additionally, the MSCI’s All-Country World Index hit a new record, alongside similar achievements for its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.