Oil prices saw a significant drop while stock markets experienced an upswing following President Donald Trump’s announcement that the conflict with Iran could conclude if Tehran agrees to a deal with Washington. Trump expressed optimism via social media, stating that assuming Iran fulfills its commitments, the long-standing conflict dubbed “Epic Fury” would end, facilitating unhindered access through the strategically crucial Strait of Hormuz, even for Iran. This comes with a caveat, however, as Trump warned that failing to reach an agreement would lead to intensified military actions against Iran.
Trump’s remarks followed his decision to temporarily halt the “Project Freedom” operation, which involves escorting ships through the Strait of Hormuz—a vital corridor handling about 20% of the world’s oil, recently blockaded by Iran, causing a global energy crisis. Although Trump paused the operation to finalize negotiations with Tehran, he clarified that the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy announced intentions to ensure safe passage through the strait, suggesting a shift following the U.S. operational pause.
The news had a pronounced impact on the markets, with Brent crude oil—which had surged as much as 6% earlier in the week due to Middle East tensions—plummeting by 11% to $97 per barrel, marking its first dip below $100 since late April. Similarly, wholesale gas prices decreased, with the British June contract dropping 6.3% to 107.8p a therm. Meanwhile, airline stocks benefited from the prospect of improved international travel conditions. Initial declines in crude oil prices accelerated after reports suggested the White House was nearing a memorandum of understanding with Iran to end the conflict, although later Iran dismissed this as merely an “American wishlist.”
Despite these developments, oil prices later regained some ground, closing down 7.3% at $101.83 per barrel after Iran’s skepticism over the U.S. proposal. The Guards did not elaborate on the new procedures for the strait but acknowledged the cooperation of shipowners and captains with Iranian regulations. The oil market volatility follows a previous surge to $126 per barrel when Trump indicated the U.S. blockade of Iranian ports could extend for months amid stalled peace talks.
European stock markets reacted positively, with the UK’s FTSE 100 index climbing by 2%, France’s Cac 40 rising 3%, and Germany’s Dax increasing by 2.1%. The MSCI’s All-Country World Index also reached a new peak, gaining 1.6%, alongside similar records for its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.