Oil prices plunge and stock markets rise as Iran announces ’safe, stable’ passage through Strait of Hormuz - as ‘peace deal’ in sight
The global economy has reacted as Iran annouces a "safe, stable" passage through the Strait of Hormuz - amid rumours a peace deal could be finalised.
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On Wednesday afternoon, an X account linked to Iran's Islamic Revolutionary Guard Corps Navy Command said "safe, stable passage" will be ensured through the disputed waterway now that "aggressors' threats" have been neutralised and there are "new protocols in place".
In afternoon trading on Wednesday, the fresh hopes saw oil prices plummet to below 100 US dollars a barrel while the cost of benchmark Brent crude dropped 11% to under 98 dollars a barrel.
The market reaction came as Donald Trump said he was pausing efforts to guide stranded ships out of the strait to finalise the deal will bring an end to the conflict and pave the way for nuclear negotiations.
The US-Tehran conflict and ensuing stand-off between the nations effectively closed the shipping lane, which is a major route for oil and gas supplies, sending energy prices soaring and hammering the global economy.
We thank captains & shipowners in Persian Gulf & Gulf of Oman for complying with Iran’s Strait of Hormuz regulations & contributing to regional maritime security. With aggressor's threats neutralized & new protocols in place, safe, stable passage through SOH will be ensured.
— فرماندهی نیروی دریایی سپاه (@niroo_daryayi) May 6, 2026
A ceasefire with Iran is already in place, but it has been increasingly fragile.
Earlier, Pakistan government official told US publication MS Now: "The prospect of a proposal to end the war is very likely in the coming days."
This announcement came one day after US Secretary of State Marco Rubio claimed the offensive stage of the Iran war is "over".
However, posting on TruthSocial on Wednesday, Trump suggested the war would reach an end if Iran agreed to end the blockade, but said it was a "big assumption" that it would.
Writing on his Truth Social platform, Mr Trump said: “Assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption, the already legendary Epic Fury will be at an end, and the highly effective Blockade will allow the Hormuz Strait to be OPEN TO ALL, including Iran.
“If they don’t agree, the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before.”
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Stock markets across the UK and Europe surged in response, with London’s FTSE 100 Index soaring 2.6% to 10485.9.
In France, the Cac 40 was 3.3% higher and Germany’s Dax was 2.8% higher.
Investor sentiment was boosted on reports that Iranian officials were travelling to China ahead of a summit between Mr Trump and Chinese leader Xi Jinping.
'Real progress'
Chris Beauchamp, chief market analyst at investing and trading platform IG, said: “There does seem to have been some real progress on key issues, and perhaps a pathway has been found that strikes a deal amenable to both sides.
“Such a result would allow markets to go back to focusing on earnings growth and a recovery in economic momentum, putting the worries of the last two months behind them.”