LONDON — Global stock markets have surged and oil prices have retreated following reports that the US and Iran are close to a preliminary agreement to end their recent conflict.
Brent crude, the international benchmark, fell sharply to $97 (£73) a barrel following the news before rebounding to just over $101. Prices had been trading as high as $108 earlier in the day as the conflict continued to squeeze global energy supplies.
Markets React to Peace Reports
Investors reacted with optimism to a report from Axios suggesting that the US believes it is close to a “one-page document” that would end the war and pave the way for detailed nuclear negotiations.
Major indices saw significant gains on Wednesday:
- Europe: London’s FTSE 100 and Germany’s Dax both closed more than 2% higher, while the French Cac 40 jumped 3%.
- Asia: South Korea’s Kospi led the way, closing up 6.45%, while the Hang Seng in Hong Kong rose 1.22%.
- US: The S&P 500 climbed by more than 1% during day trading.
A Fragile Path to Diplomacy
The proposed memorandum of understanding would reportedly declare an immediate end to hostilities. It would also initiate a 30-day period of negotiations focused on re-opening the Strait of Hormuz—a vital chokepoint for a fifth of the world’s oil—alongside discussions on Iran’s nuclear programme and the lifting of US sanctions.
However, the diplomatic breakthrough remains precarious. An Iranian foreign ministry spokesperson confirmed the US proposal is being considered, but President Donald Trump has since suggested a final deal may still be some distance away.
Writing on his Truth Social platform, Mr. Trump warned that assuming an agreement was guaranteed was “a big assumption.” He added that any failure to reach a deal would result in military bombardments “at a much higher level and intensity” than seen in earlier operations.
Impact of the Conflict
Despite Wednesday’s drop, oil prices remain significantly higher than the $70-per-barrel average seen before the outbreak of the US-Israel war with Iran.
The conflict has effectively closed the Strait of Hormuz for weeks, following Iranian threats to target tankers in response to US-led strikes. This closure has caused production to slump and global gas prices to soar, leaving the world economy highly sensitive to any shift in rhetoric from Washington or Tehran.
The US is reportedly awaiting a formal response from Iran on several key points within the next 48 hours.
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