Oil prices saw a decline and stock markets witnessed a rise as President Donald Trump announced the potential end of conflict with Iran, suggesting the Strait of Hormuz could be accessible to all parties if Tehran concedes to a deal with Washington. Trump took to social media to state, “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.” Despite this, he warned that failure to reach an agreement would result in intensified bombing campaigns.
Trump’s comments followed his decision to temporarily halt the “Project Freedom” operation, which has been escorting vessels through the critical maritime chokepoint that facilitates about 20% of the world’s oil transit but has faced Iranian blockades since February, sparking a global energy crisis. Although the blockade on Iranian ports remains, the president expressed a brief pause to focus on finalizing negotiations. In response, the Iranian Revolutionary Guards’ Navy indicated that safe passage would be ensured through the strait once US threats subsided, marking Iran’s initial feedback on the US’s operational pause.
The announcement led to a significant drop in Brent crude oil prices, plunging 11% to $97 per barrel, marking its first dip below $100 since April 22. Wholesale gas prices also experienced a decline, with the British June contract falling 6.3% to 107.8p per therm. This development positively impacted airline stocks due to improved prospects for international travel. Earlier in the day, oil prices had been trending downward, a movement that gained momentum after a report suggested the White House was nearing an agreement with Iran that could lay the groundwork for deeper nuclear discussions. Nevertheless, oil prices later rebounded slightly, trading down 7.3% at $101.83 per barrel, as Iran dismissed the developments as merely “an American wishlist [and] not a reality.”
While the details of the new procedures for the strait remain unspecified, the Iranian Guards expressed gratitude towards shipowners and captains for adhering to Iranian guidelines while navigating the waterway. The previous surge in oil prices, reaching $126 per barrel, was attributed to Trump’s earlier assertions that the US blockade might persist for months amid stalled peace talks.
In the financial markets, European stocks experienced a boost on Wednesday. The UK’s FTSE 100 index increased by 2%, France’s Cac 40 rose by 3%, and Germany’s Dax climbed 2.1%. Meanwhile, MSCI’s All-Country World Index saw a 1.6% rise, hitting a new record alongside similar achievements in its emerging markets index and the broadest Asia Pacific shares outside Japan, which grew by 2.5%.