Oil prices experienced a notable decline while stock markets rallied following statements from former U.S. President Donald Trump regarding potential peace developments with Iran. Trump announced that if Iran were to reach an agreement with Washington, the ongoing conflict would conclude, and the strategic Strait of Hormuz would be accessible to all nations, including Iran. This announcement came through a social media post where Trump emphasized, “Assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption, the already legendary Epic Fury will be at an end, and the highly effective Blockade will allow the Hormuz Strait to be OPEN TO ALL, including Iran.” He also issued a stark warning that failure to reach a deal would lead to intensified military action.
The potential end to hostilities prompted Trump to temporarily halt the “Project Freedom” initiative, which aimed to escort ships through the Hormuz Strait—a vital channel for global oil supplies that Iran had blockaded since late February. Despite pausing this operation to finalize negotiations with Tehran, Trump affirmed that the blockade of Iranian ports would persist. In a statement reported by state media, the Revolutionary Guards’ Navy expressed readiness to ensure safe passage through the strait, indicating a shift in response to the U.S. halting its escort operations.
The market reacted swiftly to these developments. Brent crude oil, which had seen a recent surge due to Middle Eastern tensions, dropped dramatically by 11% to $97 per barrel, marking its first dip below $100 since April 22. Similarly, wholesale gas prices saw a decrease, with the British June contract declining by 6.3% to 107.8p a therm. Airline stocks benefited from the improved outlook for international travel. The downward trend in oil prices was further influenced by a report suggesting the White House was nearing a memorandum of understanding with Iran to end the conflict, potentially paving the way for detailed nuclear discussions.
However, as the day progressed, oil prices partially recovered, trading at $101.83 a barrel after Iran dismissed the reported agreement as merely an “American wishlist” rather than a reality. The Revolutionary Guards’ statement did not clarify the new procedures for the strait but acknowledged the cooperation of shipowners and captains in adhering to Iranian regulations, hinting at a diplomatic opening.
Meanwhile, European stock markets responded positively to the geopolitical developments. The UK’s FTSE 100 index climbed by 2%, France’s Cac 40 increased by 3%, and Germany’s Dax rose by 2.1%. This optimism was mirrored globally, with MSCI’s All-Country World Index reaching a new peak, alongside significant gains in its emerging markets benchmark and Asia Pacific shares outside Japan, which saw a 2.5% rise.