Oil prices plunge and Europe’s stock markets rally after Trump calls off Iran strikes

AI desk brief

Oil prices sold off sharply after Trump said planned strikes on Iran were cancelled and talks with Tehran would begin, easing immediate geopolitical risk premia. Brent fell 5% to $83.50/bbl after trading as low as $81.55, while WTI dropped more than $5 to $79.47; the move followed a July rally of more than 20% as fighting resumed and Strait of Hormuz shipping risks escalated.

For precious metals, the key transmission is through inflation expectations and rates: Kathleen Brooks at XTB said the oil drop should help support markets by easing inflation fears and potentially dampening bond yields, after 30-year U.S. Treasury yields hit a 19-year high last week. That channel is modestly constructive for gold and silver if real-yield pressure continues to ease, though the immediate risk-off premium from Middle East tensions is also fading.

The market still faces headline risk. Tony Sycamore at IG warned that this could become a repeat of last week if talks collapse and Iran again threatens shipping through Hormuz or attacks tanker traffic. Opec+ also agreed to lift output by about 188,000 bpd from September, but the article argues Gulf disruptions and war-related export losses have limited the price impact so far.