Global markets experienced notable shifts as oil prices dropped and stock markets surged following statements from Donald Trump indicating a potential resolution to the conflict with Iran. The U.S. President suggested that if Tehran reached an agreement with Washington, the long-standing conflict, dubbed “Epic Fury,” could conclude, and the strategic Strait of Hormuz would be accessible to all, including Iran. Trump cautioned, however, that a failure to reach a deal would lead to escalated military action, with “the bombing” resuming at greater intensity.
Trump’s comments came amid his decision to temporarily halt “Project Freedom,” a U.S. operation to escort ships through the Strait of Hormuz, which has been under an Iranian blockade since February, contributing to a global energy crisis. Despite pausing this operation, Trump confirmed that the blockade of Iranian ports would continue. Iran’s Revolutionary Guards’ Navy responded by assuring safe passage through the strait, suggesting that U.S. threats were diminishing with new measures being implemented.
In response to these developments, Brent crude oil prices initially plummeted by 11%, reaching $97 a barrel, marking the first time prices dipped below $100 since April 22. Wholesale gas prices also declined, with the British June contract dropping 6.3%. The potential for improved international travel led to a rise in airline stocks. Earlier reports suggested that the White House was nearing a memorandum of understanding with Iran to conclude the war, fostering optimism for more comprehensive nuclear discussions.
Nonetheless, oil prices regained some ground later, trading at $101.83 a barrel after Iran dismissed the purported agreement as an “American wishlist” rather than a feasible reality. The Revolutionary Guards did not elaborate on the new procedures for the strait but expressed gratitude to shipowners and captains for adhering to Iranian regulations during transits.
European stock markets responded positively, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 increasing by 3%, and Germany’s Dax gaining 2.1%. The MSCI All-Country World Index also achieved a record high, rising by 1.6%, alongside significant gains in its emerging markets benchmark and its broad Asia Pacific shares index outside Japan, which advanced by 2.5%.