Global oil prices dropped sharply on Wednesday while stock markets surged, driven by growing optimism over a potential diplomatic breakthrough aimed at ending the ongoing conflict involving Iran.
According to US media outlet Axios, Washington believes it is close to finalising an agreement with Iran that could reopen the strategic Strait of Hormuz and bring an end to the war. The report cited US officials familiar with the discussions.
Following the news, Brent crude oil fell nearly 11 per cent, slipping below the $100 per barrel mark, while West Texas Intermediate dropped more than 12 per cent, falling below $90 per barrel. European natural gas prices also declined by around 11 per cent.
The easing of energy prices triggered a strong rally in global equity markets. London’s FTSE 100 rose 2.3 per cent during midday trading, while major European indices in Paris and Frankfurt gained close to 3 per cent.
Market analysts said investor sentiment improved significantly on expectations of reduced geopolitical risk. One strategist noted that optimism surrounding a possible resolution had encouraged a broad “risk-on” shift across financial markets, leading to lower bond yields and a weaker US dollar.
Axios reported that the United States and Iran are nearing agreement on a draft one-page memorandum of understanding that could establish a framework for ending hostilities and initiating further negotiations on nuclear issues. The proposed deal reportedly includes Iran pausing nuclear enrichment activities, while the US would release frozen Iranian assets worth billions of dollars.
The report added that Washington is awaiting Tehran’s response on several key points within 48 hours. However, officials cautioned that no final agreement has yet been reached, although negotiations are said to be closer than at any point since the conflict began.
In Asia, South Korean markets also rallied strongly, with the Kospi index surging more than 5 per cent to surpass 7,000 points for the first time. The jump was led by a sharp rise in Samsung shares, which gained over 14 per cent, pushing the company’s market value above $1 trillion amid booming global demand for artificial intelligence chips.
Meanwhile, the Japanese yen strengthened against the US dollar amid speculation of possible intervention by Japanese authorities to stabilise the currency.
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