Oil prices plummeted while stock markets surged following President Donald Trump’s remarks indicating the potential cessation of the conflict with Iran, contingent upon Tehran striking a deal with Washington. Trump expressed via social media his willingness to end the conflict, known as the “Epic Fury,” and open the Strait of Hormuz to all, provided Iran upholds its part of the agreement. He cautioned, however, that failure to reach a deal would result in escalated military actions.
Trump’s comments emerged after he announced a temporary pause in “Project Freedom,” an operation that escorts ships through the strategically crucial Strait of Hormuz, responsible for about 20% of the world’s oil supply. In response, Iran’s Revolutionary Guards’ Navy assured safe passage through the strait, marking their first response to the U.S. pause in operations. Despite this pause, the blockade of Iranian ports remains in effect.
The initial news led to a sharp decline in Brent crude oil prices, which fell 11% to $97 a barrel, marking the first drop below $100 since late April. This decline followed a prior increase owing to recent Middle East attacks. Concurrently, wholesale gas prices also decreased, with the British June contract dropping by 6.3%. Airline stocks benefited from the improved outlook for international travel. The oil price decline accelerated after reports suggested the U.S. and Iran were nearing an agreement on a memorandum of understanding to conclude the conflict, although Iran later dismissed these claims as unrealistic.
Despite the initial drop, oil prices rebounded slightly, trading at $101.83 per barrel after Iran labeled the proposed agreement as an “American wishlist.” The Revolutionary Guards’ statement did not detail new procedures for the strait but expressed gratitude to shipowners and captains for adhering to Iranian regulations.
Meanwhile, European stock markets responded positively to the developments. The UK’s FTSE 100 index climbed by 2%, while France’s Cac 40 and Germany’s Dax saw increases of 3% and 2.1%, respectively. Globally, MSCI’s All-Country World Index reached a new record, rising by 1.6%, alongside similar gains in its emerging markets and Asia Pacific indices.