UK and European equities moved higher on Monday after the United States and Iran announced a peace agreement that included the reopening of the Strait of Hormuz, easing fears over global energy supplies and sending oil prices sharply lower.
The FTSE 100 gained 0.70% in early trading, while Germany’s DAX rose 1.88% and France’s CAC 40 advanced 1.69%. Sterling strengthened 0.22% against the U.S. dollar to $1.3436.
Peace Agreement Signals End to Hostilities
Pakistani Prime Minister Shehbaz Sharif announced the agreement on social media, stating that both sides had agreed to “the immediate and permanent termination of military operations on all fronts, including in Lebanon,” with a formal signing ceremony scheduled for 19 June in Geneva.
U.S. President Donald Trump later confirmed the agreement, writing on Truth Social, “The Deal with the Islamic Republic of Iran is now complete. Congratulations to all! I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!”
The announcement helped calm markets that had been concerned about disruption to one of the world’s most important oil shipping routes.
Oil Prices Tumble as Strait of Hormuz Reopens
Energy markets reacted strongly to the prospect of restored shipping through the Strait of Hormuz.
Brent crude fell 4.91% to $83 per barrel, while U.S. benchmark WTI crude dropped 5.67% to $80.05 per barrel. The sharp decline reflected expectations of improved supply flows and reduced geopolitical risk in the region.
Meanwhile, gold moved higher as investors continued to assess the broader implications of the agreement, with spot gold rising 2.26% to $4,314.53 per troy ounce.
Differences Emerge Over Terms of Agreement
Despite the positive market reaction, differing interpretations of the agreement quickly surfaced.
Iran’s Supreme National Security Council confirmed that military operations would cease “immediately and permanently” and said formal signing would take place on 19 June. The council also indicated that negotiations on a final settlement would begin only after commitments made by the other side had been fulfilled.
Iranian officials subsequently stated that a 60-day negotiation process would commence only after the United States released frozen Iranian assets, lifted the naval blockade and formally ended the conflict.
However, a senior U.S. official disputed that characterisation, telling Axios, “This is completely not true. This is a pay-for-performance deal and no frozen funds will be released without the Iranians implementing their commitments.”
Reports from Iran’s state-affiliated Mehr News suggested a draft memorandum included the staged release of $24 billion in frozen Iranian assets, although neither Washington nor Tehran officially confirmed those details.
Regional Tensions Remain
Questions also remain over the wider regional implications of the agreement.
Shortly before the deal was announced, Israel carried out a strike against a Hezbollah command centre in Beirut’s southern suburbs, prompting criticism from President Trump, who wrote: “This morning’s attack on Beirut should not have happened.”
According to Israeli media reports, Prime Minister Benjamin Netanyahu told Trump that Israel would not withdraw from Lebanon and did not consider itself bound by provisions relating to Lebanon contained within the agreement.
UK Corporate Round-Up
In company news, Sigma Healthcare withdrew from the process to acquire Boots Group, stating that a potential transaction no longer aligned with its strategic objectives or capital allocation priorities.
Meanwhile, the Financial Times reported that the BBC is preparing to cut hundreds of positions within its core news division as part of a broader restructuring programme that could result in around 2,000 job losses and generate substantial cost savings across the organisation.
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