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Oil prices slide after diplomatic signals
Brent crude fell 5% to below $100 a barrel on Wednesday after US President Donald Trump announced progress in negotiations to end the conflict with Iran and Tehran allowed non-hostile vessels to transit the Strait of Hormuz.
Conflicting claims over peace talks
Trump stated on Tuesday that discussions to end the war were actively underway, asserting that the parties involved were eager to reach an agreement. He named Vice President JD Vance and Secretary of State Marco Rubio as key figures in the negotiations.
Iranian officials swiftly dismissed these claims as "fake news." Foreign Ministry spokesman Esmail Baghaei questioned the credibility of US diplomacy, stating, "Can anyone believe their claims of mediation when they started this war and continue attacking us?"
Despite Tehran's denials, reports from The New York Times, Reuters, and Israel's Channel 12 cited unnamed sources claiming the US had presented a 15-point plan to Iran. The proposal allegedly includes demands for the Strait of Hormuz to be recognized as a free maritime zone, with Iran receiving sanctions relief in return. The BBC has not independently verified these reports.
Strait of Hormuz reopens to non-hostile shipping
Iran's mission to the United Nations announced on Wednesday that "non-hostile vessels" would be permitted to pass through the Strait of Hormuz, provided they coordinate with Iranian authorities and comply with security regulations. The statement followed earlier threats by Tehran to target ships attempting to use the waterway.
The Strait, a critical chokepoint for global energy supplies, typically handles about 20% of the world's oil and liquefied natural gas. Its partial reopening eased concerns over supply disruptions, contributing to the decline in oil prices.
Market reactions and economic warnings
Stock markets in the Asia-Pacific region rose in early trading as investors responded to the diplomatic developments. Japan's Nikkei 225 and South Korea's Kospi each climbed over 2%, while Australia's ASX 200 gained 1.8%. Hong Kong's Hang Seng and Shanghai's composite indices also saw modest increases.
In Europe, the UK's FTSE 100 opened 1% higher, and Germany's Dax rose by approximately 1.5%. Meanwhile, gold prices, often seen as a safe-haven asset, fell to around $4,500 an ounce after peaking at $5,600 in late January.
Energy industry leaders warned of potential shortages. Shell CEO Wael Sawan cautioned that Europe could face oil supply constraints by April, following disruptions in South and Southeast Asia. BlackRock CEO Larry Fink warned that oil prices reaching $150 a barrel could trigger a global recession.
Ongoing military exchanges
Despite the diplomatic overtures, Iran and Israel continued to exchange missile strikes across the Middle East. Trump reiterated claims of "regime change" in Iran, alleging that Iranian leaders had agreed to abandon nuclear ambitions-a statement Tehran has repeatedly denied.
Oil prices remain significantly higher than before the US and Israel launched attacks on Iran on February 28, reflecting persistent geopolitical tensions and supply risks.
