Oil prices now under $100 a barrel, stocks rally on Mideast

World oil prices dived Wednesday and stock markets rallied on fresh hopes for an end to the Iran war.
Washington believes it is close to reaching an agreement with Iran to reopen the key Strait of Hormuz and end the conflict, US news outlet Axios reported, citing two US officials. International oil benchmark Brent North Sea plunged almost 11 percent to under $100 a barrel.

The main US contract, West Texas Intermediate, dived more than 12 percent to under $90 a barrel. European gas prices slumped 11 percent. That boosted equities, with London’s benchmark FTSE 100 index jumping 2.3 percent around midday.

In the Eurozone, the Paris and Frankfurt markets won around three percent. “The (Axios) news has ignited fresh optimism that we’re moving in the right direction for global energy markets, which is supporting a broad risk-on move,” noted Saxo UK investor strategist Neil Wilson.

“Bond yields slipped along with the US dollar as risk sentiment picked up with a swifter end to the conflict vital to addressing the market’s inflation risk.” According to Axios, the two sides are close to agreeing on a “one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations”.

It said the deal would involve Iran committing to a moratorium on nuclear enrichment and the United States agreeing to release billions of dollars of frozen Iranian funds. Washington is reportedly awaiting a response from Tehran on several key points in the next 48 hours.

“Nothing has been agreed yet, but the sources said this was the closest the parties had been to an agreement since the war began,” Axios said. Elsewhere on Wednesday, Seoul’s Kospi stocks index piled on more than five percent to pass 7,000 points for the first time.

That came on the back of an eye-watering surge by Samsung, which rocketed 14.4 percent to hit a market capitalisation above $1 trillion thanks to huge demand for its AI chips.

Samsung is only the second Asian firm after Taiwan’s TSMC to reach the figure. Samsung’s shares have risen around 300 percent over the past year as the artificial intelligence boom boosts South Korean growth.

The yen surged against the dollar on what is thought to have been an intervention by Japanese authorities to support the struggling currency.