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- President Trump agreed to a two-week suspension of planned military action against Iran, contingent on Iran reopening the Strait of Hormuz, with talks set to begin in Pakistan.
- Markets reacted sharply to the news, with oil prices plunging and global stock futures surging as investors welcomed the temporary easing of tensions.
President Donald Trump agreed to suspend planned military action against Iran for two weeks, stepping back from an earlier ultimatum that had alarmed governments and markets around the world.
The pause was conditional on Iran agreeing to reopen the Strait of Hormuz, a vital shipping lane for global oil and gas. Trump announced the decision on Truth Social, crediting discussions with Pakistani Prime Minister Shehbaz Sharif and Field Marshal Asim Munir with helping broker the outcome. He described it as a mutual ceasefire between both sides. ⁽¹⁾
How the Agreement Came Together
The ceasefire was reached less than two hours before a deadline Trump had set for Iran to reopen the strait or face military strikes. Earlier that day, Trump had issued stark warnings about the consequences of inaction, which generated significant concern internationally. ⁽²⁾
The breakthrough came after Pakistan’s Prime Minister Sharif asked Trump to extend the deadline by two weeks and separately urged Iran to reopen the strait as a goodwill gesture. Iran’s Foreign Minister Abbas Araghchi confirmed that ships would be permitted safe passage through the strait during the two-week period. ⁽³⁾
Talks between Iran and the US are expected to begin in Pakistan in the coming days. Iran’s proposal includes a withdrawal of US forces from regional bases, the lifting of sanctions, the release of frozen Iranian assets, compensation for war-related damages, and a framework for controlled passage through the strait. ⁽⁴⁾
Trump had previously described an earlier Iranian proposal as insufficient, though what shifted in the hours between that rejection and his acceptance was not immediately explained.
Why the Strait of Hormuz Matters
The Strait of Hormuz carries roughly 20% of the world’s oil and gas and is one of the most strategically important waterways in the global energy system.
After the conflict began in late February, Iran restricted access to the strait, sending oil prices sharply higher, stoking inflation concerns, and creating uncertainty around global interest rate policy. Governments and companies moved quickly to manage the resulting energy shock.
Strong Market Reaction
Financial markets responded immediately to the ceasefire news. Oil prices plunged, with WTI crude oil falling to around $85 per barrel and Brent crude sliding to $91 per barrel. US stock futures gained more than 2%.
In Asia, Japan’s Nikkei climbed around 5%, while gold climbed more than 2% to around $4,840 per ounce. The Australian dollar and euro both gained against the US dollar, which fell to near a one-month low.
US Treasury yields declined as well, with the benchmark 10-year yield dropping to 4.24%, its lowest level since mid-March, as traders began factoring in the possibility of Federal Reserve rate cuts later in the year. ⁽⁵⁾
Cautious Optimism
Despite the strong market moves, many investors are holding back from making significant new bets. A lasting shift in sentiment could require a durable peace rather than a short-term halt.
The two-week window provides space for diplomacy, but markets and governments will be watching the talks closely between the two nations to see whether they lead to a broader and more permanent agreement.
