Oil prices experienced a sharp decline while stock markets surged following statements from Donald Trump indicating that the conflict with Iran could conclude if Tehran agrees to a deal with Washington. The U.S. President suggested that the Strait of Hormuz would become accessible to all nations under such an agreement. Trump’s social media post stated that if Iran consents to the conditions already discussed, the conflict termed “Epic Fury” would conclude, and the effective blockade would allow the strait to be open to all, including Iran. However, Trump warned that if no deal is reached, military actions would resume with increased intensity.
This development comes after Trump announced a temporary halt to the “Project Freedom” initiative, which involved escorting ships through the Strait of Hormuz. This waterway, crucial for transporting a fifth of the world’s oil supply, has witnessed a blockade by Iran since February, contributing to a global energy crisis. Although the U.S. paused its operations to finalize a potential agreement with Tehran, the blockade on Iranian ports remains enforced. Iran’s Revolutionary Guards’ Navy acknowledged the U.S. decision, stating safe passage through the strait would be ensured with new measures in place.
The news initially caused Brent crude oil prices to plummet by 11%, dropping to $97 per barrel, marking the first instance since April 22 that it fell below $100. Wholesale gas prices also decreased, with the British June contract falling 6.3% to 107.8p a therm, while airline stocks saw a rise due to improved prospects for international travel. The oil price decline accelerated after reports suggested that the White House was nearing a memorandum of understanding to end the conflict with Iran, setting the stage for detailed nuclear discussions. However, the oil market retraced some losses later, with prices settling at $101.83 a barrel as Iran dismissed the U.S. terms as unrealistic.
While the statement from Iran’s Revolutionary Guards did not detail the new procedures for the strait, it expressed gratitude to shipowners and captains adhering to Iranian regulations. The oil market had previously reached $126 a barrel last week, its highest point since 2022, amid concerns that the U.S. blockade of Iranian ports could persist and peace negotiations remained stalled.
European stock markets experienced a notable rally on Wednesday, with the UK’s FTSE 100 index rising by 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax climbing 2.1%. Additionally, MSCI’s All-Country World Index reached a new record, rising 1.6%, alongside gains in its emerging markets benchmark and its broad Asia Pacific shares index, which saw a 2.5% increase.