Oil prices experienced a significant drop while stock markets surged following President Donald Trump’s announcement that the conflict with Iran could conclude if Tehran agrees to a deal with Washington, promising that the Strait of Hormuz would be accessible to all. On social media, Trump stated that should Iran comply with the agreement terms, the “already legendary Epic Fury will be at an end,” and the blockade around the strait would be lifted, allowing open passage. However, he warned that if a deal was not reached, military actions would resume with greater intensity.
President Trump indicated a temporary halt to the “Project Freedom” operation, which involves escorting ships through the Strait of Hormuz—a crucial channel for about 20% of the world’s oil supply—blockaded by Iran since late February, a situation contributing to the global energy crisis. Despite this pause aimed at negotiating with Tehran, Trump confirmed that the blockade of Iranian ports would persist. Iran’s Revolutionary Guards’ Navy responded, indicating that the US threats were diminishing and safe transit would be assured under new procedures, although specifics were not disclosed.
The market reacted swiftly, with Brent crude oil prices plummeting 11% to a low of $97 per barrel, marking the first dip below $100 since April 22. Concurrently, European stock markets experienced a rally; the UK’s FTSE 100 index climbed 2%, France’s CAC 40 increased by 3%, and Germany’s Dax rose by 2.1%. MSCI’s All-Country World Index saw a 1.6% rise, achieving a new record, alongside its benchmarks for emerging markets and Asia Pacific shares outside Japan, which rose by 2.5%.
The decline in oil prices was further propelled by reports suggesting that the White House was nearing a one-page memorandum of understanding to conclude the conflict with Iran, laying the groundwork for comprehensive nuclear discussions. However, oil prices later recovered some losses, settling at $101.83 a barrel—a 7.3% drop—after Iran dismissed the developments as an “American wishlist” rather than a tangible agreement. Meanwhile, wholesale gas prices saw a decline, and airline stocks rose amid prospects of improved international travel.
The oil market had previously seen prices soar to $126 a barrel last week, the highest since 2022, following Trump’s remarks that the blockade on Iranian ports could endure for months amidst stalled peace negotiations. The Guards’ expression of gratitude towards shipowners and captains for adhering to Iranian navigation rules highlighted the ongoing complexities in the region’s maritime operations.
