In a development that saw oil prices drop and stock markets rise, President Donald Trump announced a potential end to hostilities with Iran, contingent upon Tehran agreeing to a deal with Washington. Trump indicated that if Iran complies with the terms already discussed, the conflict, referred to as the “Epic Fury,” could conclude, with the Strait of Hormuz being accessible to all nations, including Iran. However, he cautioned that failure to reach an agreement would lead to an escalation in military actions.
Trump’s remarks came on the heels of his decision to temporarily halt “Project Freedom,” a U.S. operation designed to escort ships through the Strait of Hormuz—a crucial waterway for global oil trade that Iran has blockaded since late February. This blockade had contributed to a worldwide energy crisis. Although the operation is paused to allow for negotiations, the U.S. blockade on Iranian ports persists. In response, Iran’s Revolutionary Guards’ Navy promised safe passage through the strait, suggesting a shift in stance as U.S. threats subside.
The immediate impact of these developments was a sharp decline in oil prices. Brent crude oil, which had previously surged due to Middle Eastern tensions, fell by 11% to a low of $97 per barrel, marking its first dip under $100 since April 22. Wholesale gas prices also decreased, with the British June contract dropping 6.3%. This led to a boost in airline stocks as the outlook for international travel improved. The oil price decline gained momentum after reports suggested that the White House was nearing a memorandum of understanding to cease the conflict with Iran, potentially paving the way for detailed nuclear discussions.
However, the decline in oil prices was somewhat mitigated later in the day as Iran dismissed the potential agreement as an “American wishlist.” Consequently, Brent crude traded down 7.3% at $101.83 a barrel. The Iranian statement did not elaborate on the new procedures for safe passage through the strait but thanked ship operators for adhering to Iranian regulations.
Amid these geopolitical tensions, European stock markets experienced a rally. The UK’s FTSE 100 index rose by 2%, France’s Cac 40 increased by 3%, and Germany’s Dax climbed by 2.1%. Globally, MSCI’s All-Country World Index hit a new record with a 1.6% rise, alongside significant gains in emerging markets and Asia Pacific shares outside Japan, which rose by 2.5%.