Oil prices saw a decline, while stock markets experienced an upswing as President Donald Trump announced a potential resolution to the conflict with Iran, suggesting the strategic Strait of Hormuz would be “open to all” should Iran agree to a deal with the United States. On social media, Trump stated, “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 the optimistic outlook, he warned that failure by Iran to reach an agreement would lead to intensified bombing campaigns.
Trump’s comments followed his decision to temporarily halt the “Project Freedom” operation, which involved escorting vessels through the Strait of Hormuz, a critical channel for about 20% of the world’s oil supply, previously blockaded by Iran since late February, causing a global energy crisis. The President mentioned that this pause was intended to finalize negotiations with Tehran, although the blockade on Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy indicated that safe passage through the strait would be guaranteed, marking their initial reaction to the U.S. suspension of operations aimed at aiding ships stranded in the waterway.
The developments initially led to a sharp drop in Brent crude oil prices, which plunged 11% to $97 a barrel, marking its first dip below $100 since April 22. The decrease followed an earlier 6% rise due to recent Middle East tensions. Concurrently, wholesale gas prices also decreased, with the British June contract falling 6.3% to 107.8p a therm. Airline stocks, on the other hand, benefited from the improved prospects for international travel. An Axios report suggesting that the White House was nearing a one-page memorandum of understanding to end the conflict with Iran further fueled the oil price drop, hinting at a framework for future nuclear negotiations.
However, later in the day, oil prices regained some ground, trading down 7.3% at $101.83 a barrel after Iran dismissed the U.S. proposals as “an American wishlist [and] not a reality.” The Revolutionary Guards’ statement did not elaborate on the new procedures for ensuring safe transit through the strait but acknowledged the cooperation of shipowners and captains with Iranian regulations.
Meanwhile, European stock markets experienced a rally on Wednesday, with the UK’s FTSE 100 index climbing 2%, France’s Cac 40 rising 3%, and Germany’s Dax increasing by 2.1%. In a broader context, MSCI’s All-Country World Index also advanced by 1.6%, reaching a new record alongside its emerging markets benchmark and its comprehensive Asia Pacific shares index, excluding Japan, which rose by 2.5%.