President Donald Trump signaled an end to Operation Epic Fury and the U.S. blockade of the Strait of Hormuz on Wednesday, promising free passage through the chokepoint if Iran agrees to terms — sending oil into freefall and equities to record highs.
Earlier Thursday morning, a Reuters report, citing a Pakistani mediation source, said that Washington and Tehran are closing in on a one-page, 14-point memorandum to formally end the war, in what would be the most concrete step toward de-escalation since the conflict began on Feb. 27.
'Open To All Or Bombing Starts': Trump's Hormuz Ultimatum On Iran
"Assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption, the already legendary Epic Fury will be at an end, and the highly effective Blockade will allow the Hormuz Strait to be open to all, including Iran," Trump said on Truth Social.
Hours earlier, Trump paused the three-day-old naval mission, dubbed "Project Freedom," that had been escorting commercial vessels through the blockaded Strait. He cited progress in talks.
Iran's Revolutionary Guards responded that passage through the Strait would be possible under new terms if U.S. threats ended.
"If they don't agree, the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before," Trump warned, indicating that Iran has not formally accepted.
Market Reactions
The energy complex unwound part of its Hormuz risk premium in a single session.
WTI crude – as tracked by the United States Oil Fund (USO) – tumbled 7.55% to $94.54 per barrel. Brent fell 6.71% to $102.50. Gasoline dropped 4.97% to $3.44. Wholesale diesel declined 5.92%.
Equities went the other way.
Futures on the S&P 500 climbed 56.88 points, on track to set new record highs at above 7,300. Contracts on the Dow Jones added 421 points to 49,719, while those on the Nasdaq 100 led at 1.2%, up 332 points to 28,347.
Bond yields fell sharply as the potential reopening of the Strait reduced fears of prolonged inflationary pressures stemming from elevated energy prices. Yields on the 10-year Treasury note were down 7 basis points to 4.35%.
Traders priced in 32% odds of Strait of Hormuz traffic returning to normal by the end of May on the prediction platform Polymarket, up from 18% earlier in the session — a 14-point move on the day.
The companion contract on a U.S.–Iran permanent peace deal showed similar movement. Polymarket prices a 12% probability of resolution by May 15, 23% by May 31, and 43% by June 30.
What's Next
The Reuters report carries an important caveat. The proposed memo, in its current form, does not mention key U.S. demands beyond a high-level framework. Implementation risk is high.
The April 8 ceasefire saw multiple violations within weeks, including Iranian seizure of vessels and exchanges of fire as recently as Monday.
