In a significant statement, U.S. President Donald Trump announced that the ongoing conflict with Iran might reach a resolution, declaring the strategic Strait of Hormuz would be accessible to all if Tehran agrees to a deal with Washington. Trump shared on social media that the legendary Epic Fury would conclude under these terms, with the effective Blockade allowing the Hormuz Strait to open, even to Iran. However, he warned that if no agreement is reached, military action would escalate to a much higher level and intensity.
This development follows Trump’s decision to temporarily halt “Project Freedom,” an operation that ensured the safe passage of ships through the strait, which has been under Iranian blockade since February, contributing to a global energy crisis. Trump mentioned this pause is intended to finalize negotiations with Tehran, although the blockade on Iranian ports will persist. In response, Iran’s Revolutionary Guards’ Navy indicated they would ensure safe transit through the strait, marking their first reaction to the U.S. decision to pause operations.
The potential de-escalation led to a notable drop in oil prices, with Brent crude tumbling 11% to $97 a barrel, marking its first dip below $100 since April 22. Wholesale gas prices also declined, with the British June contract falling 6.3% to 107.8p a therm. The prospect of improved international travel conditions saw airline stocks rise. Earlier in the day, oil prices had been falling, spurred further by a report suggesting the White House was nearing an agreement on a memorandum of understanding to end the war with Iran, aiming for a framework for more detailed nuclear discussions.
Despite the initial decline, oil prices later recovered some losses, trading down 7.3% at $101.83 a barrel, after Iran dismissed the U.S. proposal as an “American wishlist.” The statement from Iran’s Guards did not detail the new procedures but expressed gratitude to shipowners and captains for adhering to Iranian regulations in the waterway. Previously, oil prices had surged to $126 a barrel due to Trump’s comments about the potential for a prolonged U.S. blockade of Iranian ports amidst stalled peace talks.
Meanwhile, European stock markets experienced a rally on Wednesday, with the UK’s FTSE 100 index rising 2%, France’s Cac 40 climbing 3%, and Germany’s Dax increasing by 2.1%. The MSCI’s All-Country World Index reached a new record, accompanied by similar gains in its emerging markets benchmark and the broadest index of Asia Pacific shares outside Japan, which rose by 2.5%.
