Oil eases 3.4% on Iran deal hopes, but climate risks persist

For climate-focused observers, the sharp drop in crude prices following President Trump’s pullback from military action against Iran serves as a stark reminder that the global economy remains captive to oil-supply shocks, heightening the urgency for a clean-energy shift. While cheaper oil may temporarily ease consumer pain, it also risks slowing investment in renewables by making fossil fuels more competitive.

U.S. stocks closed higher on Friday, buoyed by a sharp drop in oil prices and an explosive public debut by SpaceX. The S&P 500 gained 0.5%, its 10th winning week in 11, while the Dow Jones Industrial Average rose 353 points (0.7%) and the Nasdaq composite edged up 0.3%. The rally was fueled by a 3.4% decline in Brent crude to $87.33 per barrel, extending a week-long slide after President Donald Trump called off threatened military strikes on Iran and suggested a deal that could reopen the Strait of Hormuz. The easing of geopolitical tensions directly relieved fears of a supply shock that had driven oil prices up from roughly $70 per barrel since the conflict began, contributing to a global wave of inflation.

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SpaceX, however, reignited AI enthusiasm by surging 19.2% in its first day of trading, catapulting Elon Musk’s rocket company to a $2.1 trillion market capitalization—greater than Exxon Mobil, Bank of America, and Coca-Cola combined.

The oil-price tailwind overshadowed a turbulent week for artificial intelligence stocks, which had careened from record highs to sudden declines on fears of an AI bubble. SpaceX, however, reignited AI enthusiasm by surging 19.2% in its first day of trading, catapulting Elon Musk’s rocket company to a $2.1 trillion market capitalization—greater than Exxon Mobil, Bank of America, and Coca-Cola combined. SpaceX’s ownership of xAI, a separate AI venture, added a powerful narrative thread, linking space transportation with the AI revolution. Yet broader AI stocks remained mixed: Micron Technology slipped 1.4%, while CoreWeave jumped 5% on news of its addition to the Nasdaq 100 index.

The market’s reaction underscores the delicate interplay between geopolitics, energy markets, and technology hype. The potential Iran deal, if realized, could normalize oil flows through the Strait of Hormuz, a critical chokepoint that handles about 21% of global petroleum consumption. That would further depress crude prices and ease inflationary pressures, potentially altering the Federal Reserve’s interest-rate trajectory. However, history cautions that similar diplomatic hopes have repeatedly evaporated, and any breakdown could send oil spiking anew.