Global oil prices tumbled and stock markets rose on Wednesday after reports that Washington had sent a peace plan to Iran, while Tehran assured “non-hostile” vessels safe passage through the strategically vital Strait of Hormuz.
Investors reacted to signs that hostilities, ongoing for nearly four weeks, could ease, though analysts cautioned that the deployment of additional US troops suggested the risk of escalation remains.
Both Brent and West Texas Intermediate (WTI) crude fell more than six percent, with Brent trading back below $100 per barrel, after former US President Donald Trump expressed optimism about ending the conflict, saying officials were “in negotiations right now.” Both benchmarks pared losses later in the day.
Speaking in the Oval Office, Trump described Iran’s recent actions as “a very big present worth a tremendous amount of money,” referring to the Strait of Hormuz, through which roughly a fifth of global oil flows. Iran has largely blockaded the waterway, driving energy prices higher and fueling inflation concerns.
Reports cited by the New York Times indicated that Washington sent a 15-point peace proposal to Iran via Pakistan. Israel’s Channel 12 suggested the plan includes a one-month ceasefire, discussions over Iran’s enriched uranium, a ban on further enrichment, sanctions relief, and assistance with civil nuclear energy, alongside Tehran guaranteeing safe maritime passage.
Tehran circulated a message via the International Maritime Organisation confirming safe transit for “non-hostile vessels” while reiterating that friendly nations would not be targeted.
Global equity markets responded positively, with Tokyo’s Nikkei up 2.9%, Hong Kong’s Hang Seng up 0.5%, Shanghai’s Composite up 1.3%, and other major Asian indices recording gains. The International Energy Agency’s Fatih Birol also indicated readiness to release oil reserves if necessary, providing further market support.
However, analysts warned that the ground situation still reflects heightened military activity, including potential deployment of 3,000 US troops to the region, suggesting that diplomatic progress could be fragile.
The economic impact of the conflict is evident worldwide. Vietnam doubled diesel prices, the Eurozone saw slowed business activity, France lowered growth forecasts, the Philippines declared a national energy emergency, Sri Lanka cut street lighting, and Bangladesh and Ireland took measures to manage surging fuel costs.
Key Market Figures (around 0700 GMT):
- West Texas Intermediate: $89.46/barrel, down 3.1%
- Brent North Sea Crude: $100.54/barrel, down 3.8%
- Tokyo Nikkei 225: 53,749.62, up 2.9%
- Hong Kong Hang Seng: 25,199.45, up 0.5%
- Shanghai Composite: 3,931.84, up 1.3%
- Euro/dollar: $1.1600, up from $1.1583
- Pound/dollar: $1.3395, up from $1.3381
- Dollar/yen: 159.00, down from 159.03
- New York Dow: 46,124.06, down 0.2%
- London FTSE 100: 9,965.16, up 0.7%
The developments reflect cautious optimism in markets, tempered by the reality of continued military posturing and geopolitical uncertainty.
