Oil prices dropped sharply and stock markets bounced back after Donald Trump signaled a possible pause in tensions with Iran. He said the US would hold off on planned strikes against Iranian energy sites, pointing to what he described as “constructive” talks about ending the conflict—though Iran quickly denied any such discussions took place.
Markets reacted instantly. Brent crude, which had earlier surged as high as $113 a barrel, fell to around $96 before stabilizing. At the same time, stocks recovered ground. In Europe, Germany’s DAX closed 1.2% higher and France’s CAC rose about 0.9%, while in the US, the S&P 500 gained over 1.1% and the Dow Jones climbed nearly 1.4%.
Just days earlier, tensions had rattled investors after Trump warned he would “obliterate” Iranian power plants if the Strait of Hormuz wasn’t reopened. Iran had threatened retaliation, raising fears of a prolonged conflict that could choke one of the world’s most critical oil routes. Roughly 20% of global oil and gas flows through that narrow passage, which has been effectively blocked since the war began on 28 February.
Trump’s latest post suggested a shift in tone. He claimed both sides had discussed a “complete and total” resolution and said he had delayed military action for five days to allow room for progress. But Iran dismissed the claim outright, calling it misinformation aimed at influencing financial markets.
The uncertainty has kept markets on edge. Analysts warn that even with a potential ceasefire, energy supply disruptions could linger, keeping oil prices elevated and costs high for businesses and households. The situation has already sparked concerns of a major global energy crisis, with comparisons being drawn to the shocks of the 1970s and the fallout from Russia’s invasion of Ukraine.
Governments are now bracing for impact. In the UK, officials are focusing on energy security and rising living costs, while borrowing costs have surged to levels not seen since the 2008 financial crisis—another sign of how deeply the conflict is shaking the global economy.
