In a significant shift in the ongoing conflict with Iran, President Donald Trump announced that the war could come to an end if Tehran agrees to a deal with Washington, leading to a notable drop in oil prices and a rise in stock markets. Trump took to social media to declare that if Iran fulfills the agreed terms, the conflict known as Epic Fury would conclude, and the strategic Strait of Hormuz, vital for global oil transport, would be open to all, including Iran. However, Trump also warned of severe consequences if Iran fails to strike a deal, stating that military actions would escalate dramatically.
This development follows Trump’s decision to temporarily halt “Project Freedom,” a US operation facilitating the escort of ships through the Hormuz Strait, which Iran has blockaded since February, causing a global energy crunch. While Trump indicated this pause is to finalize a potential agreement with Iran, he clarified that the blockade of Iranian ports would persist. In response, Iran’s Revolutionary Guards’ Navy expressed readiness to ensure safe passage through the strait, marking their first reaction to the US’s strategic pause in operations.
The initial news sparked a sharp decline in Brent crude oil prices, which plummeted by 11% to $97 a barrel, dipping below $100 for the first time since April. This drop followed a rise earlier in the week due to Middle Eastern tensions. Wholesale gas prices also saw a decline, while airline stocks surged, reflecting optimism about international travel prospects. The decline in crude prices accelerated after reports suggested that the US and Iran were nearing a preliminary understanding to end the conflict, potentially paving the way for detailed nuclear negotiations. However, oil prices later recovered slightly, trading at $101.83 a barrel, as Iran dismissed the reported agreements as mere aspirations rather than reality.
The Iranian Guards’ statement did not disclose specifics about the new procedures for the strait but acknowledged the cooperation of shipowners and captains adhering to Iranian regulations. Last week, oil prices had soared to $126 a barrel, the highest since 2022, following Trump’s remarks about the prolonged US blockade of Iranian ports amid stalled peace negotiations.
European stock markets responded positively to these developments, with the UK’s FTSE 100, France’s Cac 40, and Germany’s Dax indexes experiencing notable gains. The global impact was also reflected in MSCI’s All-Country World Index, which rose to a new record alongside its emerging markets benchmark and the broadest index of Asia Pacific shares, excluding Japan, indicating widespread investor optimism amid the unfolding geopolitical situation.
