Oil prices experienced a decline and stock markets saw an upward trend following remarks from Donald Trump indicating a potential resolution to the conflict with Iran. The U.S. President suggested that the ongoing tensions could subside, with the Strait of Hormuz being accessible to all if Iran agrees to a deal with Washington. Trump’s statement on social media implied that assuming Iran adheres to prior agreements, the notable conflict known as Epic Fury would conclude, allowing the effective blockade to open the strategic strait to all vessels, including those from Iran.
Nonetheless, Trump warned of severe consequences should Iran fail to reach an agreement, stating that military actions could intensify significantly. This development followed his decision to temporarily halt the “Project Freedom” operation, which involved escorting ships through the crucial strait. The blockade initiated by Iran in late February had previously resulted in a global energy crisis, as the strait is vital for transporting approximately 20% of the world’s oil supply. Trump emphasized that while the operation was paused to finalize negotiations with Iran, the blockade on Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy declared that safe passage through the strait would be guaranteed with the cessation of U.S. threats and the implementation of new measures.
Following these announcements, Brent crude oil prices, which had surged by up to 6% earlier in the week due to the latest Middle East attacks, plummeted by 11% to reach as low as $97 per barrel. This marked the first instance of prices dropping below $100 since late April. Additionally, wholesale gas prices declined, with the British June contract decreasing by 6.3% to 107.8p per therm. Meanwhile, airline stocks gained as the prospects for international travel improved. Earlier in the day, crude prices were already on a downward trajectory, and the decline further accelerated after reports suggested the White House was nearing a memorandum of understanding to end the conflict with Iran. The potential framework for detailed nuclear discussions was reportedly supported by multiple sources, including U.S. officials.
Despite this, oil prices later recouped some of their losses, trading at $101.83 a barrel, down 7.3%, as Iran dismissed the developments as an “American wishlist” rather than reality. The Iranian Guards’ statement did not elaborate on the specifics of the new procedures but expressed gratitude to shipowners and captains for complying with Iranian regulations while navigating the strait. Previously, oil prices had peaked at $126 a barrel the prior week, the highest since 2022, amid stalled peace talks and Trump’s indication that the U.S. port blockade could continue for an extended period.
In the financial markets, European stock indices rallied on Wednesday. The UK’s FTSE 100 index gained 2%, while France’s Cac 40 rose by 3%, and Germany’s Dax saw a 2.1% increase. The MSCI’s All-Country World Index also experienced a 1.6% rise, reaching a new record, alongside similar achievements for its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which increased by 2.5%.