Global markets edged higher on Wednesday as oil prices fell sharply following news of a temporary ceasefire between the United States and Iran.
US President Donald Trump said he has agreed to halt strikes on Iran for two weeks, raising hopes that oil and gas could resume flowing through the Strait of Hormuz.
The major shipping route carries about one-fifth of the world’s energy supply.
Iran confirmed that it would stop its attacks if attacks against it stopped, and said that safe transit through the strait would be possible during the ceasefire period.
Oil prices reacted immediately as US crude futures fell nearly 16.5 percent to $94 a barrel, while S&P 500 futures jumped more than two percent and the US dollar weakened, according to Reuters.
Markets have been under pressure since the conflict escalated earlier this year, with oil prices rising as much as 50 percent in March.
“The market is predicting that Trump was looking for an off-ramp into Iran,” said Jamie Cox of Harris Financial Group, adding: “Today, he found one and he took it.”
Analysts said the truce could prove to be a turning point, though uncertainty remains: “This is a good start and could pave the way for a more permanent reopening — but there’s still a lot of work to do,” IG analyst Tony Sycamore wrote in a note.
Trump described Iran’s proposal as “a viable basis for negotiation” and said that a long-term peace deal is being negotiated.
