Japanese stocks soared on May 25, with the Nikkei 225 index gaining more than 3% and the Tokyo Stock Price Index (Topix) hitting record intraday and closing highs as investors sought riskier assets amid hopes for a US-Iran peace deal [1, 2, 3].
The rise came after US President Donald Trump announced on May 24 that a peace deal with Iran had been "largely negotiated," including plans to reopen the strategic Strait of Hormuz, which Iran has blockaded since late February [3]. Trump described the negotiations as proceeding in an "orderly and constructive manner," but said officials were instructed "not to rush into a deal," adding, "Both sides must take their time and get it right. There can be no mistakes!" [3].
The Strait of Hormuz blockade has disrupted 10-11 million barrels per day of crude oil supply [3]. As a result, Brent crude oil prices fell nearly 5% on May 24, reaching about $98.47 per barrel by early May 25 GMT, reflecting market uncertainty amid mixed US statements on the deal's prospects [3].
Markets currently expect roughly 100 million barrels of stranded crude oil to start flowing once a peace deal is implemented. However, analysts like June Goh of Sparta forecast it will take three to six months to restore full production and reopen refineries to pre-blockade levels [3]. Goh said, "Sparta estimates still about three to six months required to get everything back to status quo, including time to bring production and refineries back online." [3]
The US also imposed a blockade on Iranian ports since mid-April amid the tensions, further complicating oil supply dynamics [3].
The surge in Japanese equities reflects renewed investor appetite for riskier assets as geopolitical uncertainties ease with news of possible peace between Washington and Tehran [1, 2, 3]. Trading on May 25 saw both the Nikkei 225 and Topix indexes reach new all-time intraday highs before closing at record levels [1, 2, 3].
