Oil prices dropped sharply and global stock markets surged on Wednesday after reports suggested the United States and Iran were nearing a framework agreement that could end the war and reopen the Strait of Hormuz.
Brent crude, the international benchmark, fell from above $108 earlier in the day to below $100 before partially rebounding above $101, while U.S. crude also recovered after steep declines.
Equity markets across Europe, Asia and the United States climbed following the reports, with investors responding to expectations that energy shipments through the Gulf could resume after weeks of disruption.
The developments followed an Axios report stating that U.S. officials believed a one-page memorandum of understanding was close to completion and could establish a path toward broader nuclear negotiations and the reopening of the strait.
European indexes closed significantly higher, with London’s FTSE 100 and Germany’s Dax rising more than 2%, while France’s Cac 40 advanced 3%.
Asian markets also posted gains, led by South Korea’s Kospi, which rose 6.45%.
In the United States, the S&P 500 climbed more than 1% in early trading, while the Dow Jones Industrial Average gained nearly 600 points.
Bond yields fell as investors anticipated easing pressure on borrowing costs, while wholesale gasoline and heating oil prices also declined.
Despite the market relief, average U.S. retail gasoline prices climbed above $4.50 per gallon for the first time since 2022, reflecting the prolonged disruption in regional oil flows.
Iran confirmed that a U.S. proposal was under review and said its response would be conveyed through mediator Pakistan.
Iran’s navy also stated that “safe, stable passage” through the Strait of Hormuz would be ensured under new security protocols.
President Donald Trump, however, warned that any agreement remained uncertain, writing that Iranian approval was “a big assumption.”
He also threatened renewed bombardments at “a much higher level and intensity” if negotiations failed.
The conflict has severely reduced shipping traffic through the Strait of Hormuz, a route that normally carries about one-fifth of global oil and gas supplies.
U.S. officials said they were awaiting Tehran’s response on several remaining points within the next 48 hours.