Oil prices fell below $100 a barrel while Asian stock markets reached a six-week high on Wednesday, as investors reacted to signs that US-Iran negotiations could resume within days. The shift helped calm financial markets unsettled by weeks of conflict and volatility tied to disruptions in global energy supply.
The prospect of renewed diplomacy follows the collapse of weekend talks and a subsequent US blockade on Iranian ports. Even so, statements from US, Pakistani, and Iranian officials suggesting a possible restart in negotiations have been enough to lift risk appetite across global markets.
Markets Rebound as Diplomacy Tempers War-Driven Volatility
Investor sentiment improved notably after US President Donald Trump said discussions with Iran could restart in Pakistan within the next two days. According to reporting from Reuters, this expectation reduced demand for traditional safe-haven assets and encouraged a return to equities and risk-sensitive currencies.
Asian markets reflected that shift. MSCI’s broadest index of Asia-Pacific shares outside Japan rose about 1.5 percent, while Japan’s Nikkei gained 1.2 percent, nearing its late-February record high. Hong Kong’s Hang Seng also climbed 1.2 percent, and Chinese blue-chip stocks edged up 0.5 percent.
On Wall Street, the momentum was already visible overnight. The Nasdaq rose 2 percent, marking its tenth consecutive day of gains, while the S&P 500 approached a record closing level. Analysts pointed to growing expectations that the conflict may soon stabilize. Tony Sycamore of IG noted, according to Reuters, that markets appear “keen to look through the immediate impact of the Middle East conflict,” anticipating a potential resolution.
Currency markets showed a similar pattern. The US dollar hovered near six-week lows, having given up most of the gains made after the conflict began in late February. The euro held near $1.18, close to its highest level since early March, as investors shifted away from the dollar’s safe-haven appeal.
Energy Disruptions Persist Despite Easing Oil Futures
Despite the drop in oil futures, underlying supply concerns remain unresolved. Brent crude fell 0.7 percent to $94.13 a barrel after a nearly 5 percent decline the previous session. Yet physical crude prices remain significantly higher, reflecting ongoing constraints tied to the closure of the Strait of Hormuz.
The waterway, which handles roughly a fifth of global oil and gas shipments, has been effectively shut since the escalation of the conflict. According to Reuters, this disruption has fueled concerns about global growth and inflation, even as futures markets signal short-term optimism.
Shipping data underscores the uncertainty. Maritime intelligence firm Kpler reported that only six vessels crossed the strait on Tuesday, down from 14 the previous day, highlighting weak confidence among shipowners. Another firm, Windward, observed that some sanctioned or falsely flagged tankers continue to test the blockade, with at least one vessel ceasing transmission after entering Iranian waters.
Meanwhile, alternative supply routes are emerging. Windward noted that at least 11 tankers carrying around 20 million barrels of Iranian oil were stationed off Malaysia, suggesting increased reliance on indirect transfer methods.
The broader economic outlook remains fragile. TheInternational Monetary Fund has already lowered its global growth forecast, warning that an escalation could push the world economy toward recession. Analysts caution that markets may be underestimating the longer-term impact of elevated energy prices, even as short-term optimism drives the current rally.
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