Oil prices saw a decline while stock markets experienced a rise following remarks from Donald Trump indicating that the conflict with Iran might conclude, and the Strait of Hormuz could be accessible to all if Tehran agrees to a deal with Washington. The U.S. President announced on social media that assuming Iran adheres to the previous agreements, the so-called “Epic Fury” campaign would end, and the blockade would enable the strait to be “OPEN TO ALL,” including Iran. However, Trump warned that if a deal is not reached, the intensity of military actions would escalate significantly.
This development followed Trump’s decision to temporarily halt the “Project Freedom” operation, which had been escorting ships through the Strait of Hormuz, a critical passageway for around 20% of the world’s oil supplies but blockaded by Iran since late February, leading to a global energy crisis. Trump mentioned that the operation would pause for a short duration to finalize a deal with Tehran, though the blockade of Iranian ports would persist. In response, the Iranian Revolutionary Guards’ Navy assured that safe passage through the strait would be guaranteed as U.S. threats subside, marking Iran’s first response to the U.S. pause in operations.
The announcement led to a sharp drop in Brent crude oil prices, which had surged by up to 6% earlier in the week due to recent Middle East tensions. Prices plummeted by 11%, hitting a low of $97 per barrel—the first time since April 22 that it fell below $100. Similarly, wholesale gas prices decreased, with the British June contract dropping 6.3% to 107.8p a therm, while airline stocks rose amid improved prospects for international travel. The decline in crude prices continued after reports suggested the White House was nearing an agreement on a memorandum of understanding to end the conflict with Iran, setting a framework for detailed nuclear negotiations.
Despite the initial decline, oil prices partially recovered later in the day, trading at $101.83 per barrel, down 7.3%, after Iran dismissed the U.S. proposals as an “American wishlist [and] not a reality.” While the exact nature of the new procedures for the Strait of Hormuz remains unspecified, the Iranian authorities expressed gratitude to shipowners and captains for complying with their regulations while navigating the waterway.
European stock markets reacted positively to the developments, with the UK’s FTSE 100 index climbing by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax rising by 2.1%. Additionally, MSCI’s All-Country World Index rose by 1.6% to reach a new record high, accompanied by similar gains in its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which increased by 2.5%.
