Wall Street and European Markets Hit Record Highs as Iran Peace Deal Sends Oil to Three-Month Low

EBM NEWSDESK ANALYSIS – Katie Winearls

A preliminary US-Iran peace accord has unleashed a global risk-on rally, driving the S&P 500 and STOXX 600 to fresh records while Brent crude posts its sharpest fall since the conflict began.

Markets Surge on Geopolitical Breakthrough

Global equity markets surged on Monday after the United States and Iran reached a preliminary peace agreement to end their three-month conflict and reopen the Strait of Hormuz — the waterway that carries roughly a quarter of the world’s seaborne oil supply.

The pan-European STOXX 600 rose 1.2% to 640.94 points, surpassing its previous record high set on 27 February — the day before the war began — and reclaiming all of its conflict-related losses in a single session. In the United States, the S&P 500 rose 1.6% and the Nasdaq Composite jumped 3%, while the Dow Jones Industrial Average climbed 470 points to close at a new record high. Business RecorderNBC News

The scale of the market reaction reflects how severely the conflict had suppressed risk appetite since late February, when US and Israeli strikes on Iran triggered the effective closure of the Strait and sent energy costs surging across the global economy.

Oil Posts Sharpest Drop Since War Began

The most dramatic move came in crude markets. Brent crude closed down 4.7% at $83.17 per barrel and WTI fell 4.8% to $80.75 — the lowest closing prices for both benchmarks since the first week of March, just days after the war was launched. NBC News

Since the peace deal announcement on 14 June, WTI and Brent had both fallen over 5% to around $80 and $83 per barrel respectively — their lowest levels since 10 March. IG

The retreat in oil prices carries significant implications for European inflation. The Eurozone had faced the prospect of a prolonged energy shock compounding already fragile growth. Lower energy costs ease pressure on the European Central Bank and reduce the risk of a stagflationary spiral that had concerned policymakers through the spring.

According to the International Energy Agency’s May Oil Market Report, more than 14 million barrels per day of supply had been shut in since February, with cumulative losses from Gulf producers exceeding one billion barrels. The global market is projected to remain in supply deficit until at least the fourth quarter of 2026. IG

That structural constraint tempers euphoria. Oil at $83 remains well above pre-war levels — Brent was trading near $70 a barrel in late February — and analysts caution that restoring full supply capacity will take time regardless of when shipping resumes.

Sectoral Rotation Drives European Gains

The composition of Monday’s European rally signals a decisive shift in investor positioning. Auto stocks led the advance with a 3.5% gain, while airlines including Lufthansa and Air France jumped more than 5%. The broader travel and leisure sector hit a record high. Energy stocks were the sole laggard, falling 2.7% in line with crude prices.

“Fund managers who had spent the spring buying eye-wateringly expensive US technology are recalculating their capital allocations, realising European consumer cyclicals and financial groups present far cheaper entry valuations now that the energy shock is dissipating.”

The rotation matters. European equities had underperformed American peers sharply through the conflict, and a sustained normalisation of energy markets could accelerate the reallocation of capital back into continental stocks. The STOXX 600 has now advanced nearly 8% year-to-date, largely closing its performance gap with the S&P 500.

The Hormuz Question

The agreement centres on the reopening of the Strait of Hormuz — the linchpin of the deal’s economic value. Around 25% of global seaborne oil trade transits through the Strait, with roughly 80% of those flows destined for Asian markets. Restoring that passage is as consequential for Asian importers as it is for European energy security. tradingeconomics

Markets are not waiting for certainty. Brent futures for delivery through February 2027 have remained anchored around $80 per barrel, suggesting traders expect supply normalisation to be gradual rather than immediate. Moving thousands of tankers out of the Persian Gulf and rebuilding damaged port infrastructure will not be a quick process — Chevron chief executive Mike Wirth has repeatedly cautioned as much.

What Comes Next

The preliminary agreement is scheduled for a formal signing ceremony on Friday. Its 14-point framework addresses the cessation of hostilities, Hormuz access, and a pathway for nuclear discussions. Until that signing holds, cautious optimism remains the operative market mood.

For European investors, the central question is duration. A durable peace translates into lower imported energy costs, a more accommodative ECB, and a structural case for European equities. A breakdown in negotiations — as occurred repeatedly since April — would reverse those dynamics rapidly.

The bond market registered Monday’s development with German 10-year Bund yields declining to three-week lows. That signal, combined with the equity surge and oil retreat, represents the most comprehensive repricing of geopolitical risk since the conflict began.

Headline rewrite options:

Iran Peace Deal Sends Markets to Record Highs and Oil to Three-Month Low

1. Wall Street and Europe Surge as US-Iran Deal Ends Three Months of Energy Shock
2. Global Stocks Hit Records as Iran Deal Reopens the World’s Most Critical Oil Chokepoint