The stock markets experienced an upward trend and oil prices decreased following President Donald Trump’s announcement that the conflict with Iran would conclude if Tehran reached an agreement with Washington. Trump expressed on social media that, should Iran fulfill the terms of the agreement, which he acknowledged as a significant assumption, the renowned Epic Fury operation would cease, and the Hormuz Strait would be accessible to all, including Iran. However, he warned that failure to reach a deal would lead to intensified bombing.
This development came after Trump declared a temporary halt to “Project Freedom,” a mission aimed at escorting ships through the strategically critical Strait of Hormuz. This waterway, which facilitates roughly 20% of global oil transport, has been under an Iranian blockade since late February, contributing to a worldwide energy crisis. Trump emphasized that while the operation was paused to finalize negotiations with Tehran, the blockade on Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy announced that US threats were subsiding and new procedures would ensure safe passage through the strait.
The initial reports caused a significant drop in Brent crude oil prices, which plummeted 11% to $97 a barrel, marking the first time prices fell below the $100 mark since April 22. Additionally, wholesale gas prices decreased, with the British June contract dropping 6.3% to 107.8p a therm. The news also bolstered airline stocks, reflecting optimism about international travel prospects. The decline in crude prices accelerated after a report suggested the White House was nearing a memorandum of understanding to terminate the conflict with Iran, setting the stage for detailed nuclear discussions.
Despite the initial plunge, oil prices rebounded later, with Brent crude trading down 7.3% at $101.83 as Iran dismissed the agreement as merely an “American wishlist.” The Revolutionary Guards did not elaborate on the specifics of the new procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations while transiting the strait. The oil market had previously surged to $126 a barrel the previous week, its highest since 2022, amid concerns over prolonged US blockades and stalled peace negotiations.
European stock markets saw a positive response on Wednesday, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 rising 3%, and Germany’s Dax increasing by 2.1%. The MSCI’s All-Country World Index also reached a new record, gaining 1.6%, alongside similar achievements for its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.