Oil prices dropped while stock markets surged following U.S. President Donald Trump’s statements indicating a potential end to conflict with Iran, alongside promises to reopen the Strait of Hormuz if an agreement is reached. Trump took to social media to assert that the war, referred to as “Epic Fury,” would conclude and the blockade would be lifted, granting all nations access to the strategic waterway, provided Iran complies with previously discussed terms. However, Trump also cautioned that failure to reach a deal would lead to intensified military actions.
The president’s remarks came amid a brief suspension of his “Project Freedom” initiative, which involved escorting ships through the strait—a critical channel for nearly 20% of global oil shipments—amidst an ongoing Iranian blockade that began in late February, igniting a worldwide energy crisis. Despite this pause, Trump assured that the blockade of Iranian ports would persist during the negotiation period. In response, Iran’s Revolutionary Guards’ Navy indicated that safe passage through the strait would be facilitated as U.S. threats recede, although specifics on new procedures were not disclosed.
The anticipation of a diplomatic resolution initially caused Brent crude oil prices to plummet by 11%, dipping below $100 a barrel for the first time since April 22. Wholesale gas prices also saw a decline, with the British June contract decreasing by 6.3%. The optimism fueled a rise in airline stocks, reflecting a positive outlook for international travel. Reports suggested that both the U.S. and Iran were nearing a framework agreement to conclude hostilities and potentially initiate more detailed nuclear discussions. However, oil prices later regained some ground, trading at $101.83 a barrel, as Iran dismissed the U.S. outlook as unrealistic.
European financial markets responded positively, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 advancing 3%, and Germany’s Dax increasing by 2.1%. Additionally, MSCI’s All-Country World Index achieved a new record, with its emerging markets benchmark and Asia Pacific shares outside Japan also experiencing substantial gains. Amid these developments, the oil market remained volatile, having previously surged to $126 a barrel after Trump’s earlier declarations about the duration of port blockades and stalled peace negotiations.
