Global financial markets experienced notable shifts as oil prices dropped and stock markets climbed following President Donald Trump’s announcement regarding the conflict with Iran. Trump indicated that the war could conclude and the strategically vital Strait of Hormuz would remain accessible to all, contingent upon Iran reaching an agreement with the United States. He shared on social media, expressing that if Iran adheres to previously agreed terms, the longstanding “Epic Fury” would cease, and the current blockade would permit free passage through the strait, including for Iran. However, he warned that failure to reach a deal would lead to an escalation in bombing, surpassing previous levels of intensity.
The president’s comments came on the heels of his decision to temporarily halt “Project Freedom,” an operation aimed at escorting ships through the Strait of Hormuz, a crucial channel for about 20% of the world’s oil supplies. Since Iran’s blockade of the strait in late February, a global energy crisis has ensued. Trump noted that the pause in operations is intended to facilitate negotiations with Tehran, though he emphasized that the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy assured safe passage through the strait, citing the diminishing US threats and the implementation of new procedures, marking Iran’s initial response to the temporary suspension of US operations.
In the market, Brent crude oil prices, which had recently surged by up to 6% due to Middle East tensions, plummeted by 11% to $97 a barrel, marking the first dip below $100 since April 22. Wholesale gas prices also saw a decline, with the British June contract falling 6.3% to 107.8p per therm, while airline stocks benefited from the potential for enhanced international travel. The downward trend in crude prices accelerated following a report that suggested the White House was nearing a memorandum of understanding with Iran to cease hostilities. The report, citing multiple sources, indicated that both parties were prepared to establish a framework for detailed nuclear discussions.
Despite these developments, oil prices later recovered some ground, trading at $101.83 a barrel, reflecting a 7.3% decrease, as Iran dismissed the US proposal as an “American wishlist” rather than a feasible agreement. The Revolutionary Guards’ statement did not detail the new procedures but expressed gratitude to shipowners and captains for respecting Iranian regulations while navigating the waterway.
Meanwhile, European stock markets experienced gains, with the UK’s FTSE 100 index rising by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax climbing 2.1%. The MSCI’s All-Country World Index also advanced by 1.6%, reaching a new high alongside similar records for its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which rose by 2.5%. Last week, oil prices had peaked at $126 a barrel, the highest since 2022, following Trump’s remarks about a potential prolonged US blockade of Iranian ports and stalled peace negotiations.