Oil prices experienced a decline while stock markets saw an uptick following statements by Donald Trump indicating a possible resolution to the conflict with Iran. The U.S. President suggested that the Strait of Hormuz, a critical maritime passage for global oil trade, could remain accessible if Tehran agreed to a deal with Washington. Trump took to social media to express that should Iran fulfill its commitments, the conflict dubbed “Epic Fury” would conclude, allowing for free passage through the strait. However, he warned that failure to reach an agreement could result in intensified military actions.
The President’s comments came on the heels of his decision to momentarily halt “Project Freedom,” a U.S. naval mission safeguarding vessels navigating the strait, which Iran has blockaded since late February. This blockade has contributed to a global energy crisis by impacting nearly 20% of the world’s oil flow. Trump emphasized that the suspension of the operation was temporary and aimed at finalizing discussions with Iran, although the blockade on Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy indicated that U.S. threats were diminishing, and new protocols would ensure the safe passage of ships through the strait, marking their initial response to the U.S. move.
As the news broke, the price of Brent crude oil, which had surged by 6% earlier due to recent Middle East tensions, plummeted by 11% to approximately $97 per barrel, marking its first drop below $100 since April 22. Additionally, wholesale gas prices in Britain decreased, with the June contract falling by 6.3% to 107.8p per therm. Optimism about international travel prospects also buoyed airline stocks. The downward trend in crude prices was further accelerated by reports suggesting that the White House was close to solidifying a memorandum of understanding with Iran to end the conflict, setting the stage for more comprehensive nuclear discussions. However, oil prices later recovered slightly as Iran dismissed the notion of an imminent deal as merely an “American wishlist.”
The statement from the Revolutionary Guards did not elaborate on the new procedures, but it acknowledged the compliance of shipowners and captains with Iranian regulations when traversing the strait. Last week, oil prices had reached $126 per barrel, the highest level since 2022, following Trump’s statements that the U.S. blockade on Iranian ports might extend for months amid stalled peace negotiations.
Meanwhile, European stock markets responded positively to the developments. The FTSE 100 index in the UK rose by 2%, while France’s Cac 40 and Germany’s Dax increased by 3% and 2.1%, respectively. The MSCI All-Country World Index also climbed by 1.6%, reaching a new record along with similar gains in its emerging markets index and its broadest Asia Pacific shares index outside Japan, which went up by 2.5%.
