Wall Street rallies as Trump’s Iran deal push sends oil prices tumbling

Wall Street rallies, crude tumbles on optimism over potential Iran agreement
Investors embraced risk assets once again as hopes of a breakthrough in the Gulf boosted confidence that a prolonged period of regional turmoil could soon ease (AP Photo/Richard Drew; Emily Elconin/Getty Images)
Investors embraced risk assets once again as hopes of a breakthrough in the Gulf boosted confidence that a prolonged period of regional turmoil could soon ease (AP Photo/Richard Drew; Emily Elconin/Getty Images)

NEW YORK, NY: Global financial markets surged into early Friday, June 12, trading as Wall Street bulls aggressively wagered on a swift diplomatic end to the 100-day Persian Gulf conflict.

Investor optimism roared back after President Donald J Trump claimed a breakthrough in backchannel negotiations, asserting he had called off scheduled military strikes following a "great settlement of the war with Iran."

The executive pronouncements instantly reversed a week of severe market declines, sparking an extensive equity rally. 

NEW YORK, NY - FEBRUARY 25: Traders work through the closing minutes of trading Tuesday on the New Y
Financial markets rebounded sharply after fresh signals that diplomacy may be gaining momentum in the Iran conflict (Getty Images)

Futures for the S&P 500 climbed 0.6% before the opening bell, while the Dow Jones Industrial Average added 0.7% and Nasdaq futures rose 0.5%.

The market upswing was further energized by immense anticipation surrounding the historic Wall Street debut of Elon Musk's SpaceX, which is slated to become the largest initial public offering on record by raising approximately $75 billion.

Oil markets react to peace hopes

The strongest market reaction came from energy markets, where traders rapidly priced in the possibility that shipping through the Strait of Hormuz could soon normalize.

The strategic waterway, which carries a significant share of global oil and gas exports, has faced months of disruption since fighting erupted in late February.

Concerns over supply shortages had helped push energy prices sharply higher throughout the conflict. 

Oil tankers and cargo ships line up in the Strait of Hormuz as seen from Mina Al Fajer, United Arab Emirates, Wednesday, March 11, 2026. (AP Photo/Altaf Qadri)
Expectations of restored energy flows triggered a sharp selloff in crude after months of wartime supply concerns (AP Photo/Altaf Qadri)

Brent crude dropped $2.94 to $87.44 a barrel, while US benchmark crude fell $3.05 to $84.66.

Despite the decline, both benchmarks remain well above the roughly $70 levels seen before the outbreak of hostilities.

The rally was also supported by anticipation surrounding SpaceX’s Wall Street debut.

Elon Musk’s rocket company is expected to raise approximately $75 billion, making it the largest initial public offering in market history.

Diplomatic reality tempers investor enthusiasm

Despite Friday’s surge, uncertainty surrounding the negotiations remains significant.

Trump appeared to undercut some of the market optimism when he rejected a description of the proposed agreement published by Iranian state media.

The contradiction highlighted the gap between investor expectations and the complex diplomatic realities still facing negotiators. 

U.S. President Donald Trump listens during a Cabinet meeting at the White House on February 26, 2025 in Washington, DC. Trump is holding the first Cabinet meeting of his second term, joined by Tesla and SpaceX CEO Elon Musk, head of the Department of Government Efficiency (DOGE). (Photo by Andrew Harnik/Getty Images)
Conflicting public statements highlighted the uncertainty that still surrounds any potential agreement between Washington and Tehran (Photo by Andrew Harnik/Getty Images)

Markets had retreated sharply earlier in the week as fears of renewed military escalation intensified.

While traders are increasingly betting that both sides want a negotiated settlement, conflicting public statements suggest that major details remain unresolved.

For now, Wall Street is betting that diplomacy will prevail. Whether the negotiations can deliver a formal agreement remains the question investors are watching most closely. 

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