Oil prices fell sharply and European stock markets rallied after US President Donald Trump signalled a possible deal with Iran that would reopen the Strait of Hormuz. Brent crude tumbled as much as 11% to $97 a barrel, the first time it has fallen below $100 since 22 April, before paring losses to trade 7.3% lower at $101.83. Wholesale gas prices also dropped, with the British June contract falling 6.3% to 107.8p per therm.
In a social media post, Trump said that if Iran agreed to a deal, the “already legendary Epic Fury will be at an end” and the Strait of Hormuz would be “open to all”, including Iran. However, he warned that if no agreement was reached, “the bombing starts” and would be at a “much higher level and intensity than before”. The president also said he would briefly pause his “Project Freedom” operation escorting ships through the strait, but maintained the blockade of Iranian ports.
Iran’s Revolutionary Guards Navy responded by stating that safe transit through the strait would be ensured with new procedures in place, though it did not specify what these entailed. Tehran dismissed reports of a potential deal as an “American wishlist, not a reality”. The crude price had hit $126 a barrel last week, its highest since 2022, after Trump said the blockade could last for months.
The news lifted stock markets across the globe. The UK’s FTSE 100 rose 2%, France’s Cac 40 gained 3% and Germany’s Dax climbed 2.1%. MSCI’s All-Country World Index hit a new record, rising 1.6%, while South Korea’s Kospi surged 6.6% to clear 7,000 for the first time, led by a 14.8% jump in Samsung Electronics. On Wall Street, the S&P 500 rose nearly 1.5%.
In bond markets, UK long-term gilt yields fell slightly, with the 30-year yield dropping 9 basis points to 5.63% after reaching its highest since 1998 the previous day. Gold, a traditional safe haven, rose 3% to $4,695 an ounce. Airline stocks also benefited from improved prospects for international travel.
Susannah Streeter, chief investment strategist at Wealth Club, commented: “A dam of tension has eased with relief flooding into financial markets, amid hopes that hostilities will cease in the Middle East, with the Trump administration making conciliatory moves.” The positive sentiment came despite an attack on a French shipping group CMA CGM vessel, the San Antonio, while crossing the strait, which injured crew members and damaged the ship.
