Oil markets and energy equities slid on Wednesday after President Donald Trump announced a pause to the U.S. military operation known as "Project Freedom," which had been intended to reopen the Strait of Hormuz. The president said the suspension would be brief while negotiators see whether discussions with Iranian representatives can reach a conclusion.
Trump framed the decision as reflecting "great progress" toward a "complete and final agreement," and said the pause would last a "short period" while officials determine whether those negotiations can be finalized. The move followed prior disruptions related to the Strait of Hormuz earlier in April, when Iran reopened the waterway before closing it again after the U.S. announced it would not lift its blockade of Iranian ports.
Crude reacted sharply to the news. Brent futures dropped more than 10% to about $97.97 per barrel, slipping below the psychologically important $100 threshold. U.S. West Texas Intermediate declined over 11% to $90.35 per barrel. The price moves came alongside broad weakness in energy equities across European and U.S. markets.
In London, major European oil companies saw steep declines. BP fell more than 5% to 542.2p, Shell declined 4.5% to 3,165.5p, and TotalEnergies dropped 5.4% to 375.07. Across the Atlantic, U.S. energy names were set lower in premarket trading: Occidental Petroleum led the pack with a premarket decline of 7.6%, Marathon Petroleum fell 6.3%, ConocoPhillips was off 5.4%, Chevron declined 5.1%, and ExxonMobil slid 4.9%.
Market participants reacted to the prospect that tensions in the Gulf could ease if negotiations with Tehran advance. That prospect supported broader market gains elsewhere even as energy benchmarks and energy stocks retraced recent strength.
Still, the president cautioned in a post on Truth Social that the existing blockade would "remain in full force and effect" during the pause. That caveat left an element of uncertainty about how long the suspension would last and whether the situation could change if talks falter.
Market context
- Brent fell to approximately $97.97 per barrel, down over 10%.
- West Texas Intermediate traded near $90.35 per barrel, down more than 11%.
- European and U.S. energy stocks recorded significant premarket and intraday losses following the announcement.
Outlook
The announcement has driven a rapid reassessment of near-term oil supply risk and pushed energy names lower, while simultaneously contributing to a lift in other parts of global markets on the prospect of reduced Gulf tensions. How talks with Iranian representatives proceed, and whether the blockade is ultimately modified, will determine the durability of recent price moves.