In a significant development, oil prices saw a decline while stock markets experienced an upward trend following President Donald Trump’s statements on the situation with Iran. Trump announced that the conflict with Iran could conclude, and the Strait of Hormuz would be accessible to all, contingent on Tehran reaching an agreement with Washington. On social media, Trump expressed optimism, stating, “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.” However, he cautioned that failing to secure a deal could lead to intensified military actions.
President Trump also revealed a temporary halt to the “Project Freedom” operation, which involves escorting ships through the strategic Strait of Hormuz. This strait is crucial as it channels about 20% of global oil supplies but has been under an Iranian blockade since late February, contributing to a global energy crisis. Despite this pause, Trump confirmed that the blockade of Iranian ports would remain intact. In a related statement, the Iranian Revolutionary Guards’ Navy indicated that safe passage through the strait would be ensured, signaling a potential de-escalation of U.S. threats and implementation of new procedures.
Amid these developments, Brent crude oil prices experienced a notable drop, plummeting 11% to $97 a barrel, marking the first instance of dipping below $100 since April 22. This decline followed earlier spikes due to Middle Eastern tensions. Meanwhile, wholesale gas prices also decreased, with the British June contract falling by 6.3% to 107.8p per therm. Airline stocks benefited from this change, reflecting an improved outlook for international travel. Earlier in the day, reports suggested that the White House was nearing a one-page memorandum of understanding to end the conflict with Iran, potentially setting the stage for more detailed nuclear discussions.
However, oil prices later regained some ground, trading down 7.3% at $101.83 a barrel, as Iran dismissed the memorandum as merely an “American wishlist [and] not a reality.” The Iranian Revolutionary Guards did not elaborate on the new procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations while transiting the waterway. This situation follows a recent surge in oil prices, which peaked at $126 a barrel last week after Trump indicated that the U.S. blockade of Iranian ports could persist for months amid stalled peace talks.
European stock markets responded positively to these developments, with notable gains recorded. The UK’s FTSE 100 index rose by 2%, France’s Cac 40 increased by 3%, and Germany’s Dax climbed 2.1%. Additionally, MSCI’s All-Country World Index reached a new record, accompanied by similar achievements for its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which grew by 2.5%.