Oil prices took a hit while stock markets received a boost following statements by Donald Trump suggesting an end to hostilities with Iran could be imminent, contingent upon Tehran agreeing to a deal with Washington. Trump indicated in a social media post that if Iran consents to the terms previously discussed, the conflict, dubbed “Epic Fury,” would conclude, and the Strait of Hormuz would be accessible to all, including Iran. Despite this, Trump warned that without a deal, military actions would resume, potentially at a heightened level of intensity compared to previous engagements.
The president’s remarks came shortly after he announced a temporary halt to the “Project Freedom” initiative, which involves escorting ships through the Strait of Hormuz. This strategic waterway, responsible for transporting about 20% of the world’s oil supply, has been under Iranian blockade since late February, contributing to a global energy crisis. Trump emphasized that while the escort operation is on pause to allow for negotiations with Tehran, the blockade on Iranian ports remains enforced. In response, Iran’s Revolutionary Guards’ Navy assured that safe passage through the strait would be maintained, signaling a potential de-escalation of tensions.
Reacting to these developments, Brent crude oil prices, which had surged by 6% earlier in the week due to escalating conflicts in the Middle East, plunged by 11%, falling to $97 a barrel, marking its first dip below $100 since April 22. Similarly, wholesale gas prices decreased, with the British June contract dropping 6.3% to 107.8p per therm. This shift in energy prices also led to a rise in airline stocks, buoyed by prospects of enhanced international travel. Meanwhile, reports that the White House was nearing a memorandum of understanding with Iran, potentially setting the stage for more comprehensive nuclear discussions, further influenced market dynamics. However, oil prices later recovered slightly, with Iran dismissing the proposed agreement as merely an “American wishlist.”
Throughout the day, Iran’s Revolutionary Guards refrained from detailing the new procedures for transiting the strait but expressed gratitude towards shipowners and captains for complying with Iranian regulations. The initial spike in oil prices, which had reached $126 a barrel last week—the highest seen since 2022—was driven by earlier statements from Trump indicating that the U.S. blockade of Iranian ports could persist for several months amid stalled peace talks.
European stock markets experienced a significant rally on Wednesday, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 increasing 3%, and Germany’s Dax rising by 2.1%. Additionally, MSCI’s All-Country World Index achieved a new record, rising by 1.6%, alongside gains in both its emerging markets benchmark and its broadest index of Asia Pacific shares outside Japan, which saw a 2.5% increase.