In a significant development, global oil prices experienced a decline while stock markets surged following a statement by former U.S. President Donald Trump, who announced the potential conclusion of the conflict with Iran. Trump suggested that the Strait of Hormuz could be accessible to all if Tehran were to reach an agreement with Washington. In a social media post, Trump noted, “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.” He also warned that failure to reach a deal could lead to escalated military actions.
This announcement came shortly after Trump declared a temporary halt to his “Project Freedom” initiative, which involved escorting vessels through the strategic waterway. The Strait of Hormuz, responsible for transporting approximately 20% of the world’s oil, had been under an Iranian blockade since late February, sparking a global energy crisis. Trump emphasized that while the escort operation would pause briefly to finalize negotiations with Tehran, the blockade of Iranian ports would continue. In response, Iran’s Revolutionary Guards’ Navy stated that safe passage through the strait would be assured, with U.S. threats subsiding and new protocols being implemented.
The news had an immediate impact on the market, causing Brent crude oil prices to plummet by 11%, reaching $97 a barrel, marking the first instance of prices dropping below $100 since April 22. Concurrently, wholesale gas prices saw a decrease, with the British June contract dropping 6.3% to 107.8p a therm, while airline stocks benefited from the prospect of enhanced international travel opportunities. The decline in crude prices was further accelerated by reports suggesting that the White House was nearing an agreement with Iran through a one-page memorandum of understanding, potentially laying the groundwork for more comprehensive nuclear discussions.
Despite the initial drop, oil prices later regained some ground, with Brent crude trading down 7.3% at $101.83 a barrel after Iran dismissed the U.S. proposal as an “American wishlist [and] not a reality.” The Revolutionary Guards’ statement did not elaborate on the new procedures for the strait but expressed gratitude to shipowners and captains for adhering to Iranian regulations during transits. Just last week, oil prices had soared to $126 a barrel, the highest since 2022, amid concerns that the U.S. blockade might persist for months with peace talks in a stalemate.
Meanwhile, European stock markets experienced a rally on Wednesday, with the UK’s FTSE 100 index rising 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax climbing 2.1%. Additionally, MSCI’s All-Country World Index saw a 1.6% increase, reaching a new record alongside similar milestones for its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.