Oil Slips, Stocks Climb as Trump Hits Pause on Hormuz Operation

The Guardian, The New York Times, Bloomberg contributed to this report.

Markets caught a breather.

Oil prices pulled back and stocks pushed higher after Donald Trump signaled progress in talks with Iran – and temporarily stepped back from a high-stakes military operation in the Strait of Hormuz.

Trump said he’s pausing “Project Freedom,” the US effort to escort commercial ships through the strait, for a short window while negotiations move forward. The waterway carries roughly a fifth of the world’s oil, and disruptions there have rattled energy markets for weeks.

The pause doesn’t mean everything is easing. The US blockade on Iranian ports is still in place. But traders heard what they wanted: a possible off-ramp.

Crude reacted quickly. Brent oil dropped about 2% to around $107 a barrel after earlier spikes tied to fresh attacks in the region. Just days ago, prices were flirting with $126 – the highest since 2022 – as fears of a prolonged standoff grew.

Stocks went the other direction.

The MSCI All-Country World Index ticked up to another record, with gains spreading across regions. In Asia, South Korea’s Kospi surged more than 6%, blowing past the 7,000 mark for the first time. US markets joined in, with the S&P 500 and Nasdaq Composite both hitting fresh highs.

There’s a mix of forces at play. Hopes for a diplomatic breakthrough are part of it. So is momentum – especially in tech, where investors keep piling into familiar winners like Apple and chip-related stocks.

Some analysts aren’t fully convinced the rally has staying power. Thin trading volumes and holiday effects could be exaggerating moves, and the situation in the Middle East can shift fast.

Still, for now, the tone has changed. Less panic, more optimism – at least until the next headline.