Oil prices have dropped to a three-month low as stocks surge following Donald Trump’s announcement of imminent progress in negotiations with Iran, which has reignited optimism about reopening the Strait of Hormuz—a critical global shipping route for energy commodities.
Markets rebounded dramatically from earlier Middle East tensions after the US president canceled planned military strikes against Iran, prompting his spokesperson to confirm that diplomatic channels are accelerating toward a potential accord that would restore maritime traffic through the strategically vital waterway.
The anticipated de-escalation drove Brent crude prices down approximately 2% to $88 per barrel—its lowest level since early March. The rebound was particularly pronounced after sustained volatility in April, when tensions pushed Brent to peaks of $120 per barrel, its highest since 2022.
The conflict between Israel and Iran had severely disrupted Hormuz operations, creating bottlenecks that inflated shipping costs and supplier premiums. Analysts note this crisis exemplified how geopolitical instability can amplify energy price swings and supply chain risks.
European equity markets followed Wall Street’s upward trend, with Thursday night’s US rally serving as a catalyst. The UK’s FTSE 100 rose 1.4% to 10,395 points, led by IAG Group, while France’s CAC 40 advanced 1.6% and Germany’s DAX climbed 1.4% in early trading.
IG chief market analyst Chris Beauchamp attributed the rally to renewed confidence in diplomatic resolutions: “Trump’s unexpected pivot from military action provided critical momentum to stagnating markets. A functional reopening of Hormuz would represent a decisive win for investors, balancing energy prices and renewing optimism.”
He cautioned, however, that successful implementation details remain contingent on diplomatic execution: “While preliminary agreements show promise, sustained progress depends on both parties finalizing operational frameworks to ensure lasting stability in the region.”
