Oil prices saw a decline while stock markets experienced an upswing following former President Donald Trump’s announcement regarding the potential resolution of the conflict with Iran. Trump indicated that the Strait of Hormuz, a critical passageway for global oil supplies, would be open to all, including Iran, should Tehran agree to a deal with Washington. He noted, however, that this assumption might be optimistic.
In a social media post, Trump warned that absent an agreement from Iran, military actions would resume with greater intensity. He also mentioned a temporary halt to “Project Freedom,” an operation escorting ships through the strait, which had been under Iranian blockade since February, causing an energy crisis worldwide. Despite this pause, the blockade of Iranian ports remains in effect. Iran’s Revolutionary Guards’ Navy responded by stating that new procedures would ensure safe passage through the strait, marking the first response to the U.S. pause in operations meant to assist stranded vessels.
The developments led Brent crude oil prices to drop by 11%, reaching $97 a barrel—the lowest since April 22—after a surge earlier in the week due to Middle Eastern tensions. This marked a significant decrease from the previous high of $126 a barrel last week, a peak not seen since 2022. Meanwhile, wholesale gas prices also fell, with the British June contract decreasing by 6.3% to 107.8p a therm. Airline stocks benefited from the improved outlook for international travel.
Reports surfaced suggesting that the White House was nearing a memorandum of understanding to end the conflict with Iran, which contributed to the oil price’s initial decline. However, prices later rebounded somewhat, trading down 7.3% at $101.83 a barrel, as Iran dismissed the report as merely an “American wishlist” rather than reality. The Revolutionary Guards did not provide specifics on the new transit procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations.
European stock markets responded positively to these developments. The UK’s FTSE 100 index rose by 2%, France’s Cac 40 gained 3%, and Germany’s Dax increased by 2.1%. Additionally, MSCI’s All-Country World Index achieved a new record, climbing 1.6%, alongside significant gains in its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.