Global equity markets rose on Friday amid guarded optimism over a tentative ceasefire between the United States and Iran, with investors anticipating weekend peace talks aimed at easing tensions in the Middle East. The announcement earlier this week of a two-week truce, which includes plans to reopen the Strait of Hormuz after a weeks-long closure, generated positive sentiment across markets worldwide, although concerns about the durability of the agreement and ongoing regional hostilities have tempered expectations.
The Strait of Hormuz, a strategic chokepoint through which approximately 20% of the world’s oil and gas transits, had been closed since the outbreak of the regional conflict at the end of February. However, only a limited number of vessels—just 10 since the ceasefire began—have passed through the waterway, with most of them being Iranian-flagged ships, according to maritime tracking data. This restricted flow continues to contribute to elevated oil prices. On Friday, crude benchmarks such as West Texas Intermediate briefly traded above $100 per barrel, reflecting ongoing concerns about supply disruptions.
Saudi Arabia has reported a significant reduction in its oil production capacity following infrastructure attacks attributed to Iranian forces. The kingdom’s official news agency announced a daily output loss of around 600,000 barrels, roughly 10% of its usual exports. This development has added further strain to global oil markets, fueling price volatility amid the fragile ceasefire.
US President Donald Trump publicly criticized Iran’s reported intention to levy tolls on vessels passing through the Strait. In a series of social media posts, he warned Iran to desist from these plans and asserted that oil would begin flowing through the waterway “with or without the help of Iran.” Trump also expressed dissatisfaction with Tehran’s management of the strait, describing it as “dishonorable” and ineffective.
Diplomatic efforts continue with US and Iranian delegations scheduled to meet in Pakistan for talks aimed at solidifying the ceasefire terms. Meanwhile, Israel and Lebanon are set to hold discussions in Washington next week, following reports that Israeli Prime Minister Benjamin Netanyahu was encouraged by US officials to scale back military strikes on Lebanon to facilitate broader negotiations. This move seeks to address violations reported by Tehran regarding Israeli attacks on Lebanese targets allegedly connected to Hezbollah.
Financial markets responded positively to these developments. Asian indices, including Japan’s Nikkei 225, Hong Kong’s Hang Seng, and China’s Shanghai Composite, closed higher. European markets also recorded gains, while markets in Sydney and Wellington showed modest declines. Wall Street extended its rally for the second consecutive session, contributing to the global uplift.
Market analysts have noted that stocks which experienced the most severe declines since the conflict began could see the sharpest recoveries in the near term. Nevertheless, they caution that the ceasefire is temporary, with substantial gaps remaining between Iran’s proposals and US positions. The reopening of the Strait of Hormuz, critics warn, may still face technical hurdles requiring weeks, or even months, to fully restore shipping operations and stabilize supply chains.
Overall, while the recent ceasefire and diplomatic momentum have injected hope into markets, uncertainties persist amid ongoing military actions and geopolitical challenges in the region.