Oil prices experienced a decline while stock markets saw an uptick following President Donald Trump’s announcement that the conflict with Iran might conclude, potentially reopening the Strait of Hormuz to all nations if Tehran agrees to a deal with Washington. In a social media post, Trump stated, “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 if Iran does not reach an agreement, military actions would escalate and be “at a much higher level and intensity than it was before.”
The president’s remarks followed his decision to temporarily halt “Project Freedom,” an operation aimed at escorting ships through the strait, which is a pivotal passage for approximately 20% of the globe’s oil supplies. Iran has blockaded this strategic waterway since late February, contributing to a worldwide energy crisis. Trump indicated that this operation would be paused “for a short period” to finalize negotiations with Tehran, although the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy issued a statement on Wednesday assuring safe passage through the strait, highlighting the end of U.S. threats and the implementation of new procedures.
The market swiftly reacted, with Brent crude oil prices, which had surged by 6% earlier in the week due to recent Middle East tensions, plummeting by 11% to $97 a barrel, marking the first dip below $100 since April 22. Concurrently, wholesale gas prices dropped, with the British June contract decreasing by 6.3% to 107.8p a therm, and airline stocks surged amid optimism for international travel. Earlier reports suggested the White House was nearing a one-page memorandum of understanding to cease hostilities with Iran, potentially setting the stage for more detailed nuclear negotiations, according to sources including two U.S. officials.
Despite the initial drop, oil prices later recuperated some losses, trading at $101.83 a barrel, reflecting a 7.3% decrease, after Iran described the proposed deal as an “American wishlist [and] not a reality.” The statement from the Revolutionary Guards did not elaborate on the new procedures but expressed appreciation to shipowners and captains for adhering to Iranian regulations when traversing the waterway. The price of oil had reached $126 a barrel the previous week, its highest since 2022, as concerns persisted over the prolonged U.S. blockade of Iranian ports and stalled peace negotiations.
European stock markets demonstrated growth on Wednesday, with the UK’s FTSE 100 index climbing by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax advancing by 2.1%. Additionally, MSCI’s All-Country World Index rose by 1.6%, achieving a new record alongside its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which surged by 2.5%.