Global oil prices have plunged and stock markets have risen after the US and Iran agreed a conditional two-week ceasefire deal that includes the reopening of the key Strait of Hormuz waterway.
The price of benchmark Brent crude fell by about 13% to $94.80 (£70.73) a barrel, while US-traded oil was more than 15% lower at $95.75.
But prices remain higher than before the conflict started on 28 February. At the time oil was trading at around $70 a barrel.
The cost of energy has jumped as oil and gas supplies from the Middle East have been severely disrupted after Iran threatened to attack ships trying to use the strait in retaliation for US and Israeli airstrikes.
Major stock indexes in the Asia-Pacific region rose in Wednesday morning trading. Japan’s Nikkei 225 gained by 5% while South Korea’s Kospi exchange jumped by nearly 6%.
Hong Kong’s Hang Seng was up by 2.8%, while the ASX 200 in Australia gained 2.7%.
US stock market futures also pointed to a higher open for Wall Street stocks.
Futures contracts are an agreement to buy an asset at an agreed price at a later point in time. In the case of US stock stock futures they can indicate the direction of the market before it opens.
In a social media post on Tuesday evening, Trump said: “I agree to suspend the bombing and attack of Iran for a period of two weeks… subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz”.
He had set a deadline for 20:00 EDT on Tuesday (00:00 GMT on Wednesday), threatening that “a whole civilisation will die tonight” if no deal was reached.
Iranian Foreign Minister Abbas Araghchi said on social media that Tehran will agree to a ceasefire “if attacks against Iran are halted”, adding that safe passage through the Strait of Hormuz “will be possible”.
Despite his threats, Trump was likely to be wary about letting energy prices “skyrocket” by escalating the conflict, said Xavier Smith from market research firm AlphaSense.
That could have led to a “self-inflicted economic wound” that few would risk, especially given the looming pressure of approval ratings on Trump’s leadership, Smith said.
More oil tankers stranded near the strait may be able to pass through the waterway during the ceasefire, providing some relief for markets in the coming weeks, said Saul Kavonic from MST Marquee.
Despite the conflict, some ships have passed through the Strait of Hormuz, although far fewer than usual.
Asian countries – including India, Malaysia and the Philippines – have negotiated safe passage for their vessels in recent weeks.
China has also acknowledged that several of its ships have crossed the strait since the war began.
Kavonic said that while a ceasefire is in place, it is still unlikely that energy production in the Middle East will fully resume until there is confidence of a lasting peace deal.
It could also take months for production to restart due to damage done to energy infrastructure in the region, he said.
