Stock markets swing and oil prices fall after Trump postpones strikes on Iran power plants

• Brent crude oil fell 10% to $101/barrel and UK gas prices dropped 6% following the announcement, while European stock indices rose 0.8-1.2% after opening lower
• The Strait of Hormuz closure has created an energy crisis that the IEA chief says equals the 1970s oil shocks combined with Ukraine war fallout; Goldman Sachs raised 2026 Brent forecast to $85/barrel from $77
• UK PM Keir Starmer scheduled emergency Cobra meeting with Bank of England governor to address economic impact and potential energy bill support as price caps expire in June

Market Summary: Trump Postpones Iran Strikes, Markets Rally

Key Developments:

President Donald Trump postponed planned U.S. military strikes on Iranian power plants and energy infrastructure for five days, citing "very good and productive conversations" with Iran aimed at resolving Middle East hostilities. This reverses a 48-hour ultimatum issued Saturday demanding Iran reopen the Strait of Hormuz.

Market Reaction:

• European equities rebounded sharply: French CAC 40 +0.8%, Spanish Ibex +1%, German DAX +1.2%, FTSE 100 up slightly
• Oil prices fell dramatically: Brent crude dropped 10% to $101/barrel after previously hitting $119.50 (highest since conflict began)
• UK natural gas declined 6% to 142p/therm
• U.S. dollar weakened 0.4% against major currencies
• Gold fell 2.5% to $4,388/ounce on reduced safe-haven demand
• UK 10-year gilt yield declined 3 basis points to 4.95%, retreating from 5% (first time since 2008 financial crisis)

Crisis Context:

Iranian actions have effectively closed the Strait of Hormuz, which carries approximately 20% of global oil and LNG supplies. The IEA chief characterized the resulting energy crisis as equivalent to the 1970s oil shocks combined with Ukraine war impacts. Tehran threatened to "irreversibly destroy" Middle East infrastructure, including water systems, if attacked.

Goldman Sachs raised its Brent crude forecast to $85/barrel average for the year, up from $77 previously.

UK Prime Minister Keir Starmer scheduled an emergency meeting with ministers and Bank of England Governor Andrew Bailey to address economic impacts and potential energy bill support measures ahead of June price cap expiration.