{"id":63044,"date":"2026-06-12T05:08:18","date_gmt":"2026-06-12T09:08:18","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/oil-prices-plunge-5-as-us-iran-peace-deal-optimism-grows-uk-inflation-expectations-surge\/63044\/"},"modified":"2026-06-12T05:08:18","modified_gmt":"2026-06-12T09:08:18","slug":"oil-prices-plunge-5-as-us-iran-peace-deal-optimism-grows-uk-inflation-expectations-surge","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/oil-prices-plunge-5-as-us-iran-peace-deal-optimism-grows-uk-inflation-expectations-surge\/63044\/","title":{"rendered":"Oil Prices Plunge 5% as US-Iran Peace Deal Optimism Grows; UK Inflation Expectations Surge"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>Brent Crude and WTI futures dropped over 5%<\/strong> following reports of a potential breakthrough in <strong>US-Iran negotiations<\/strong>, with a deal potentially reopening the <strong>Strait of Hormuz<\/strong>.<\/li>\n<li><strong>UK 12-month inflation expectations surged to 4.0%<\/strong> in May, up from 3.2% in February, according to the latest <strong>Bank of England\/Ipsos survey<\/strong>.<\/li>\n<li><strong>Air France-KLM (<a href=\"\/stock\/AF\">AF<\/a>) CEO Ben Smith<\/strong> confirmed the group has not been contacted by <strong>Castlelake<\/strong> regarding a potential joint bid for <strong>easyJet (<a href=\"\/stock\/EZJ\">EZJ<\/a>)<\/strong>, though he remains open to discussions.<\/li>\n<li><strong>ECB Governing Council member Olli Rehn<\/strong> stated the central bank will not pre-commit to a specific interest rate path, maintaining a data-dependent approach.<\/li>\n<li><strong>German Defence Minister Boris Pistorius<\/strong> warned that there is no official timeline for when the <strong>U.S.<\/strong> might cease providing certain capabilities for <strong>NATO&#39;s<\/strong> defense plans, amid broader shifts in transatlantic relations.<\/li>\n<\/ul>\n<h2>Energy Markets React to Diplomatic Breakthrough<\/h2>\n<p><strong>Brent Crude<\/strong> and <strong><a href=\"https:\/\/stockmarketwatch.com\/energy\/crude-oil\" data-internallinksmanager029f6b8e52c=\"12\" title=\"Crude oil\">West Texas Intermediate<\/a> (WTI)<\/strong> futures plummeted more than <strong>5%<\/strong> on Friday morning as markets reacted to reports of a 60-day negotiation window between the <strong>U.S.<\/strong> and <strong>Iran<\/strong>. The optimism stems from the potential &quot;Islamabad Agreement,&quot; mediated by <strong>Qatar<\/strong> and <strong>Pakistan<\/strong>, which could see <strong>Iran<\/strong> receive <strong>$24 billion<\/strong> in frozen funds in exchange for reopening the <strong>Strait of Hormuz<\/strong>.<\/p>\n<p>The geopolitical de-escalation follows <strong>President Donald Trump&#39;s<\/strong> decision to call off planned military strikes, significantly easing fears of a prolonged conflict in the Middle East. Analysts suggest that if a permanent ceasefire is reached, oil prices could stabilize, though <strong>ING<\/strong> warned that prices could still spike to <strong>$120\u2013$130 per barrel<\/strong> if flows are not restored by late July.<\/p>\n<h2>UK Inflation Fears and Central Bank Caution<\/h2>\n<p>The <strong>Bank of England\/Ipsos Inflation Attitudes Survey<\/strong> for May revealed a sharp rise in public inflation expectations, with the 12-month outlook jumping to <strong>4.0%<\/strong>. This increase from <strong>3.2%<\/strong> in the previous quarter reflects the &quot;second-round effects&quot; of the recent energy shock. The data puts further pressure on the <strong>BoE<\/strong> to maintain a hawkish stance as it balances sticky inflation against cooling economic growth.<\/p>\n<p>In the Eurozone, <strong>ECB<\/strong> official <strong>Olli Rehn<\/strong> echoed a cautious sentiment, stating that the central bank will not &quot;pre-commit to any particular rate path.&quot; While a <strong>25-basis-point hike<\/strong> is widely expected in June, policymakers are emphasizing a meeting-by-meeting approach. The <strong>ECB<\/strong> remains focused on ensuring inflation returns to its <strong>2%<\/strong> target despite the volatility introduced by the Middle East conflict.<\/p>\n<h2>Aviation Consolidation and Defense Uncertainty<\/h2>\n<p>In the aviation sector, Air France-KLM (<a href=\"\/stock\/AF\">AF<\/a>) CEO <strong>Ben Smith<\/strong> addressed rumors regarding a takeover of easyJet (<a href=\"\/stock\/EZJ\">EZJ<\/a>). While <strong>Castlelake<\/strong> is reportedly exploring a bid for the low-cost carrier, Smith clarified that no official contact has been made. However, he noted that <strong>easyJet<\/strong> remains an &quot;attractive&quot; target due to its low market capitalization and strategic slots at hubs like <strong>London Gatwick<\/strong>.<\/p>\n<p>On the defense front, <strong>German Defence Minister Boris Pistorius<\/strong> highlighted the growing complexity of <strong>NATO<\/strong> coordination. Speaking on the sidelines of security talks, Pistorius noted that while the <strong>U.S.<\/strong> has announced some troop drawdowns, there is no official confirmation on the withdrawal of specific &quot;capabilities&quot; essential for <strong>NATO&#39;s<\/strong> defense plans. <strong>Germany<\/strong> is currently pushing for greater European military self-reliance, with plans to increase defense spending to <strong>5% of GDP<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Brent Crude and WTI futures dropped over 5% following reports of a potential breakthrough in US-Iran negotiations, with 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