In a significant development, oil prices saw a sharp decline and stock markets experienced a rise following President Donald Trump’s announcement regarding potential peace with Iran. Trump indicated that the ongoing conflict, referred to as “Epic Fury,” could reach its conclusion if Tehran agreed to a deal with Washington, leading to the reopening of the strategic Strait of Hormuz. This waterway, a crucial route for global oil supplies, has been under Iranian blockade since late February, contributing to a worldwide energy crisis.
Through a social media statement, Trump expressed optimism about reaching an agreement with Iran, stating that the blockade would allow the Strait of Hormuz to be accessible to all, including Iran, provided that Tehran adheres to the terms previously discussed. However, he issued a stern warning that failure to reach a deal would result in escalated military actions. The president also mentioned a temporary halt to the “Project Freedom” operation, which involves escorting ships through the strait, to facilitate negotiations with Iran. Despite this pause, he emphasized that the blockade of Iranian ports would persist.
The news had an immediate impact on the global oil market. Brent crude prices, which had surged by up to 6% earlier in response to recent Middle East tensions, plummeted by 11% to $97 per barrel, marking its first drop below $100 since April 22. This shift was further influenced by reports suggesting that the White House was nearing a preliminary agreement with Iran, potentially paving the way for nuclear negotiations. Although oil prices later recovered slightly, trading at $101.83 per barrel, Iran dismissed the possibility of an agreement, labeling it an “American wishlist.”
In response to the US’s decision to pause operations, the Iranian Revolutionary Guards’ Navy indicated that safe passage through the Strait of Hormuz would be ensured, with new procedures to be implemented. However, the specifics of these measures were not disclosed. The statement acknowledged the cooperation of shipowners and captains in adhering to Iranian regulations while navigating the waterway.
Meanwhile, European stock markets rallied in light of the developments. The UK’s FTSE 100 index saw a 2% increase, while France’s Cac 40 rose by 3%, and Germany’s Dax climbed by 2.1%. Additionally, the MSCI All-Country World Index achieved a new record, with its emerging markets benchmark and its Asia Pacific index outside Japan rising by 2.5%.