Global markets reacted with relief as oil prices dropped and stock indices climbed following U.S. President Donald Trump’s announcement that the conflict with Iran could conclude, potentially reopening the Strait of Hormuz. Trump communicated via social media that if Iran fulfills its commitments in negotiations with Washington, the conflict dubbed “Epic Fury” could end, and the blockade that has restricted passage through the strait would be lifted, allowing access to all, including Iran.
Nonetheless, Trump cautioned that failure to reach an agreement would result in intensified military action, stating, “the bombing starts” at a higher level than previously seen. This development follows his decision to temporarily halt “Project Freedom,” a U.S. operation aimed at escorting ships through the vital waterway, which has seen restrictions due to Iranian actions since late February, causing a significant disruption in global oil supplies.
Trump noted that the pause in operations was intended to facilitate finalizing a deal with Tehran, although the blockade of Iranian ports would persist. In response, the Iranian Revolutionary Guards’ Navy assured that safe passage through the strait would be maintained, suggesting an end to U.S. threats and the implementation of new procedures, marking the first official response from Iran to the U.S. operational pause.
The immediate effect on the energy market was substantial, with Brent crude oil plunging 11% to $97 a barrel, marking its first dip below $100 since April 22. Additionally, wholesale gas prices decreased, and airline stocks surged in anticipation of improved global travel conditions. Earlier in the day, oil prices had been declining, and this trend accelerated after reports surfaced indicating that the White House was nearing a one-page memorandum of understanding to conclude the conflict with Iran, potentially leading to detailed nuclear discussions.
Despite the initial drop, oil prices later recovered slightly, trading at $101.83 a barrel after Iran dismissed the U.S. proposals as merely an “American wishlist.” Meanwhile, European stock markets experienced significant gains, with the UK’s FTSE 100, France’s Cac 40, and Germany’s Dax all posting increases. MSCI’s All-Country World Index, along with its benchmarks for emerging markets and Asia Pacific shares outside Japan, also hit new highs, reflecting the optimism generated by the potential de-escalation of tensions in the region.