Markets Rally, Oil Prices Slide as Trump Signals Progress in Iran War Talks

Global markets advanced on Monday while oil prices recorded a sharp decline after US President Donald Trump indicated that diplomatic efforts to end the war with Iran were moving forward.

European markets traded higher, with France’s CAC 40 rising 1.1%, Germany’s DAX gaining 1%, and Britain’s FTSE 100 posting modest growth. US markets remained closed for the Memorial Day holiday.

Across Asia, investor sentiment strengthened. Japan’s Nikkei 225 surged 2.9%, while Australia’s S&P/ASX 200 and China’s Shanghai Composite also ended in positive territory. Markets in South Korea and Hong Kong remained shut due to public holidays.

The market reaction followed Trump’s statement that negotiations with Iran were progressing in an “orderly and constructive manner.” According to regional officials quoted by the Associated Press, Washington and Tehran are reportedly nearing an agreement that could bring the conflict to an end, reopen the strategically significant Strait of Hormuz, and lead Iran to surrender its stockpile of highly enriched uranium.

The Strait of Hormuz remains central to global energy flows. Since the outbreak of conflict, disruptions in the waterway have constrained oil shipments from the Persian Gulf, creating uncertainty across international energy markets. Countries heavily dependent on imported crude, including Japan, have been particularly exposed to supply risks.

Analysts say markets are now shifting from pricing geopolitical instability toward expectations of de-escalation.

“Markets are rapidly transitioning from pricing geopolitical fear toward pricing a potential peace dividend,” analyst Stephen Innes said, noting that expectations around reopening Hormuz have pushed oil and the US dollar lower.

Oil prices reflected that optimism. US benchmark crude dropped by more than 4% to USD 91.83 per barrel, while Brent crude fell to USD 98.68 per barrel.

In currency markets, the US dollar weakened slightly against the Japanese yen, while the euro gained ground.

The broader market sentiment was also supported by stronger-than-expected earnings reports from major US companies, although inflation concerns continue to linger as geopolitical uncertainty remains in focus.