Oil prices experienced a drop while stock markets saw an uptick following President Donald Trump’s statement about the potential end of hostilities with Iran. Trump indicated that the strategic Strait of Hormuz would remain “open to all” if Tehran agreed to a deal with the United States. On social media, Trump remarked that the legendary Epic Fury conflict could conclude, and the effective blockade would allow open access to the Hormuz Strait, including for Iran, provided Iran adheres to agreed terms—a significant assumption, he noted.
However, Trump also warned of dire consequences if Iran declined a deal, stating, “the bombing starts” and predicting a higher intensity of conflict. This development followed Trump’s announcement of a temporary pause in his “Project Freedom” initiative, which involved escorting ships through the strait—a key passage for about a fifth of global oil supplies that Iran had blockaded since late February, sparking an energy crisis worldwide. Although the operation is halted for now, Trump clarified that the blockade of Iranian ports would continue. Meanwhile, Iran’s Revolutionary Guards’ Navy responded, stating safe passage through the strait would be assured as US threats ceased, though they did not detail the new measures.
The prospect of de-escalation initially caused Brent crude oil prices to plummet by 11% to $97 a barrel, marking the first dip below $100 since April 22, following earlier price surges due to Middle Eastern tensions. Similarly, wholesale gas prices in Britain declined, with the June contract falling 6.3% to 107.8p a therm. Airline stocks benefited from the improved outlook for international travel. A report suggested that the White House was nearing a one-page memorandum of understanding with Iran to cease the conflict, with both parties prepared to outline a framework for more comprehensive nuclear discussions. This news contributed to the morning’s declining oil prices, although they later rebounded to $101.83 a barrel after Iran dismissed the proposal as an “American wishlist, not a reality.”
Despite the fluctuating oil market, European stocks rallied. The UK’s FTSE 100 index saw a 2% rise, while France’s Cac 40 and Germany’s Dax increased by 3% and 2.1%, respectively. Globally, MSCI’s All-Country World Index achieved a 1.6% increase, setting a new record alongside its emerging markets benchmark and Asia Pacific shares outside Japan, which rose by 2.5%.
Last week, oil prices had soared to $126 a barrel, the highest since 2022, following Trump’s remarks that the US port blockade on Iran might persist for months amid stalled peace negotiations. As the situation develops, market participants remain attentive to the evolving geopolitical landscape and its impact on global energy supplies and economic indicators.