New York: Oil prices dropped and global stock markets went up following reports that the US and Iran are close to a deal to end the war.
Brent crude futures, the global benchmark oil price, fell to $97 a barrel after the reports before rebounding to over $101. The price was over $108 earlier in the day, according to reports.
The FTSE 100 index of London's largest public firms and Germany's Dax index closed over 2% up while the French Cac 40 was up 3%.
Asian indexes also ended the day higher while the US S&P 500 rose 1% in early trading.
The market movements come after Axios reported that the US believes it is close to a one-page document which will end the war and set up detailed nuclear talks. Oil prices are still much higher than the $70 a barrel they were hovering around before the start of the US-Israel war with Iran on February 28.
About a fifth of global oil and gas shipments usually cross the strait, which has been effectively closed for weeks.
West Texas Intermediate (WTI), the US benchmark, dropped as much as 10 per cent in early trading before recovering slightly to trade around $94.32 a barrel, according to Business Insider. Brent crude, the international benchmark, fell 7 per cent to about $102.14 a barrel.
The New York Times reported that Brent crude later traded around $103 a barrel, while WTI hovered near $96 a barrel as investors reacted to signs that tensions in the Gulf may be easing.
The market rally followed a report by Axios that Washington and Tehran are close to agreeing on a one-page memorandum of understanding aimed at ending the conflict that began in late February. The report said major progress could be made within the next 48 hours.
President Donald Trump said the US was pausing “Project Freedom”, a naval operation launched earlier this week to escort commercial ships through the strait. The Wall Street Journal reported that the operation had triggered fresh Iranian attacks on merchant ships and US naval vessels in the region.
The conflict has sharply increased fuel costs in recent weeks. The New York Times reported that average gasoline prices in the United States rose to $4.54 a gallon, while diesel prices climbed to $5.67 a gallon since the conflict began.
