Oil prices experienced another decline on Thursday, while Tokyo’s Nikkei index spearheaded a significant rally in Asian stock markets, buoyed by increasing optimism surrounding the potential conclusion of the conflict in Iran and a resurgence in demand for artificial intelligence technologies.
Market sentiment rose as investors anticipated that negotiations between Washington and Tehran could result in the reopening of the Strait of Hormuz, which has been effectively closed since early March, disrupting approximately 20% of global oil supplies.
The optimism was further amplified on Wednesday when President Trump indicated that a deal was imminent. This statement came a day after he paused efforts to assist stranded vessels in Hormuz, which had incited Iranian retaliatory actions and jeopardized an already fragile ceasefire.
Trump remarked that if “Iran agrees to the terms discussed,” the conflict would cease; however, he warned that if an agreement is not reached, military operations would escalate “with greater intensity.” He informed the press, “We’ve had very productive discussions in the past 24 hours, and reaching an agreement is certainly possible.”
As of now, Iran has not officially responded to the latest U.S. proposal, with foreign ministry spokesperson Esmaeil Baqaei stating that it is “still under assessment.”
On Thursday, oil prices plummeted by more than 2%, adding to a nearly 10% decline over the previous two days, with both the international benchmark Brent crude and West Texas Intermediate in the U.S. dropping below the $100 mark.
While Iranian officials have stated they are evaluating the U.S. proposal to end the ongoing conflict, which has hindered crucial shipping routes in the Strait of Hormuz for 69 days, they are also attempting to formalize their authority over these waters.
A report from Lloyd’s List, a shipping analytics and intelligence firm, revealed that Iran has established a new regulatory body called the Persian Gulf Strait Authority, tasked with approving ship transits and collecting tolls in the Strait of Hormuz.
The report indicated that Iranian authorities have issued a sample application form that ship operators must complete to obtain permission for passage through the strait, requiring comprehensive details about vessel ownership, insurance, crew information, and intended routes.
Lloyd’s noted that Iran, through the PGSA, has positioned itself as the sole authority capable of granting transit permissions in the Strait of Hormuz. Their Thursday update stated that “currently, the strait is closed,” with no vessel movements recorded since May 4.
French President Emmanuel Macron communicated with Iranian President Masoud Pezeshkian on Wednesday, expressing his condemnation of attacks on civilian infrastructure and vessels from the UAE near the Strait of Hormuz. “I conveyed my serious concern about the escalating tensions and denounced the unwarranted strikes against Emirati civilian assets,” Macron stated on social media following their discussion.
Macron also urged both the U.S. and Iran to lift their respective shipping restrictions in the strait unconditionally. He underscored the importance of a France and U.K.-led initiative aimed at ensuring safe passage for commercial vessels through the strait post-conflict, asserting that “recent developments clearly illustrate the necessity of such a mission.” He also indicated plans to discuss the initiative with President Trump.
Pezeshkian responded by acknowledging France’s dialog-based approach and emphasized that any negotiations for the full reopening of the Strait of Hormuz would necessitate the removal of the U.S. naval blockade.
As reporters were leaving the Oval Office on Wednesday, one inquired about a negotiation deadline with Iran. Trump replied, “There will never be a deadline. It will happen, but there will never be a deadline.” Previously, he had attempted to set a deadline for negotiations, only to extend it as discussions continued.
Earlier in the day, Trump told the New York Post that it is premature to send senior U.S. officials back to Iran for further in-person negotiations.
Meanwhile, gasoline prices in the U.S. surged to an average of $4.54 per gallon on Wednesday, marking the highest level since July 2022, according to AAA statistics. Since the onset of the Iran conflict in late February, regular gas prices have climbed by 52% or $1.56 per gallon, driven by disruptions in Middle Eastern oil supplies impacting consumer costs. This price is nearing the all-time high of $5.02 per gallon recorded in June 2022 during a spike in inflation amid the pandemic.
Despite a decrease in oil prices on Wednesday due to renewed hopes for a U.S.-Iran agreement, the divergence between crude prices and what consumers pay at the pump remains evident. During a White House event with UFC fighters, President Trump remarked that there had been “very productive discussions in the past 24 hours” concerning a peace deal with Iran, though it was unclear whether these discussions were direct or facilitated by Pakistani intermediaries.
“They are eager to negotiate,” Trump stated. “We’ve had very good talks recently, and achieving an agreement is quite possible.” He acknowledged past discussions that seemed promising but ultimately did not yield results.
Earlier on Wednesday, Trump characterized the ongoing conflict with Iran as going “unbelievably well.” He drew parallels between the situation in Iran and the successful operation earlier this year that saw former Venezuelan leader Nicolas Maduro captured. “We’re engaged in what I refer to as a skirmish, and we are performing exceptionally well, similar to our swift action in Venezuela,” he asserted, adding that he anticipates a quick resolution to the conflict in Iran.
