Global oil prices dropped while stock markets experienced an upswing following statements by former U.S. President Donald Trump indicating a potential end to the conflict with Iran. Trump announced via social media that if Iran agreed to certain terms, the conflict, referred to as “Epic Fury,” would conclude, and the Strait of Hormuz would be accessible to all nations, including Iran. Nevertheless, Trump cautioned that failure to reach an agreement would result in increased hostilities, warning of intensified bombings.
This development emerged after Trump declared a temporary halt to his “Project Freedom” initiative, which involved escorting ships through the Strait of Hormuz—a critical channel for nearly 20% of the world’s oil supply. The strait had been under an Iranian blockade since February, exacerbating a global energy crisis. While Trump paused the operation to finalize negotiations with Tehran, he maintained that the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy signaled their commitment to ensuring safe passage through the strait, acknowledging the U.S. decision to pause its operations and indicating a shift in procedures.
Initially, the announcement led to a sharp decline in Brent crude oil prices, which plummeted 11% to a low of $97 per barrel—the first dip below $100 since April. Wholesale gas prices also decreased, with the British June contract dropping 6.3% to 107.8 pence a therm. This positive outlook for international travel buoyed airline stocks. The downward trend in oil prices accelerated following a report suggesting that the White House was nearing an agreement with Tehran on a memorandum of understanding to conclude the conflict. The report, citing multiple sources, hinted at both parties’ readiness to establish a framework for further nuclear negotiations.
Despite initial declines, oil prices began to recover later in the day, trading at $101.83 a barrel, as Iran dismissed the proposed agreement as merely an “American wishlist.” The Revolutionary Guards’ announcement did not elaborate on the new procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations during transit. Previously, oil prices had soared to $126 a barrel, the highest since 2022, amid prolonged U.S. port blockades and stalled peace talks.
European stock markets experienced a notable rally on the same day, with the UK’s FTSE 100 index rising by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax by 2.1%. Additionally, MSCI’s All-Country World Index climbed 1.6% to a new record, along with its benchmarks for emerging markets and Asia Pacific shares outside Japan, which rose by 2.5%.