In a significant development, oil prices witnessed a decline while stock markets experienced an upswing following a statement from Donald Trump regarding the potential end of hostilities with Iran. The U.S. President announced via social media that the ongoing conflict, referred to as “Epic Fury,” would conclude and the Strait of Hormuz would be accessible to all, contingent upon Iran reaching an agreement with Washington. Trump emphasized that the continuation of these favorable conditions depended on Iran adhering to previous agreements, while also issuing a stark warning of intensified military actions if a deal was not achieved.
The President’s comments followed his decision to temporarily halt the “Project Freedom” initiative, which involved U.S. naval escorts for ships navigating the strategically vital Strait of Hormuz. This waterway, responsible for the transit of approximately 20% of global oil supplies, has been under an Iranian blockade since February, causing a worldwide energy crisis. Trump confirmed that while the escort operations would pause briefly to facilitate negotiations with Tehran, the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards Navy conveyed assurance of safe passage through the strait under new procedures, marking Iran’s initial reaction to the U.S.’s operational pause.
The announcement initially caused Brent crude oil prices to plummet by 11%, reaching as low as $97 per barrel for the first time since April 22. This drop contrasted with the recent surge in prices, which had climbed as high as $126 per barrel following Trump’s earlier declaration about the prolonged U.S. blockade of Iranian ports and stalled peace talks. Wholesale gas prices also decreased, contributing to a rise in airline stocks and optimism for international travel. The market’s response was further influenced by reports suggesting the White House was nearing a preliminary agreement with Iran to conclude the conflict, setting the stage for more comprehensive nuclear discussions.
Despite the initial drop, oil prices later moderated, with Brent crude trading down 7.3% at $101.83 per barrel after Iran dismissed the developments as an “American wishlist” rather than reality. The Iranian Guards’ statement, while expressing gratitude to shipowners and captains for adhering to Iranian regulations, did not detail the new measures ensuring safe passage through the Strait of Hormuz.
European stock indices reacted positively to the unfolding events, with the UK’s FTSE 100 index increasing by 2%, France’s Cac 40 climbing 3%, and Germany’s Dax rising by 2.1%. Additionally, MSCI’s All-Country World Index achieved a new record, rising 1.6%, alongside significant gains in its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which advanced by 2.5%.