Oil prices experienced a notable decline while stock markets saw an upswing following President Donald Trump’s announcement that the conflict with Iran might soon conclude, potentially reopening the Strait of Hormuz to international passage. Trump conveyed through social media that if Iran abides by previously agreed terms, the conflict, referred to as the “Epic Fury,” could end, leading to the lifting of the blockade and free passage through the crucial waterway. However, Trump cautioned that failure to reach an agreement with Tehran would lead to intensified military actions.
The president’s statement came amid his decision to temporarily pause “Project Freedom,” an operation aimed at escorting vessels through the Strait of Hormuz, which is vital for global oil supplies. Since late February, Iran’s blockade of this key maritime route has exacerbated a global energy crisis. Trump emphasized that while the escort operation would halt briefly for negotiations, the blockade on Iranian ports would remain intact. In response, the Iranian Revolutionary Guards’ Navy indicated that safe passage through the strait would be assured with new regulations, marking Iran’s initial reaction to the U.S. pause in operations.
Following this development, Brent crude oil prices, which had surged by 6% earlier in the week due to heightened tensions in the Middle East, plummeted by 11%, dropping to $97 a barrel. This marked the first instance of prices falling below $100 since late April. Concurrently, wholesale gas prices in the UK decreased, and airline stocks benefited from the prospects of revived international travel. Reports suggested that the White House was nearing a memorandum of understanding with Iran to cease hostilities, hinting at a potential framework for future nuclear discussions. However, Iran described these developments as merely an “American wishlist.”
Despite the initial sharp fall, oil prices later recovered some ground, settling at $101.83 a barrel, reflecting a 7.3% decrease. The Iranian Guards did not provide specifics on the new measures at the strait but expressed gratitude to shipowners and captains for adhering to Iranian protocols. Previously, oil prices had peaked at $126 a barrel, the highest since 2022, amid prolonged U.S. port blockades and stagnant peace negotiations.
European markets responded positively to the unfolding situation, with significant gains recorded. The UK’s FTSE 100 index increased by 2%, France’s Cac 40 rose by 3%, and Germany’s Dax climbed by 2.1%. Global market indicators also reached new milestones, as the MSCI’s All-Country World Index advanced by 1.6%, alongside similar achievements for its emerging markets index and the broad Asia Pacific shares index, excluding Japan, which rose by 2.5%.