Oil prices have fallen to a three-month low and stocks are rallying after Donald Trump claimed he was close to reaching a deal with Iran, sparking fresh hopes among investors.
Financial markets were rebounding at the end of a week which began with renewed tensions in the Middle East.
But the US president said on Thursday that he had called off further military strikes against Iran which were scheduled for the evening and claimed the Strait of Hormuz would open as soon as an agreement is signed.
The prospect of the critical transit route reopening helped fuel a drop in the price of Brent crude oil, which was down about 2% to 88 US dollars a barrel – the lowest price since early March.
Oil and gas prices soared in the aftermath of the US-Israeli war with Iran and the effective closure of the Strait of Hormuz in the Middle East, a key international waterway for transporting the commodities.
Brent crude rose to reach highs of about 120 dollars a barrel in April, its highest level since 2022.
European stocks were rallying on Friday morning following a strong session for US markets on Thursday night.
The UK’s FTSE 100 index was up by about 1.4% to 10,395, with British Airways owner IAG Group the biggest riser and housebuilders also gaining ground.
France’s Cac 40 index was up by around 1.6%, and Germany’s Dax was 1.4% higher in early trading.
Chris Beauchamp, chief market analyst for IG, said: “Trump’s comments on a peace deal and his decision to swerve fresh bombing provided the shot in the arm that markets had been looking for, putting indices on the front foot across the globe while bringing down oil prices.
“The usual pesky caveats about details and signing remain of course, but if the two sides could actually come to an agreement that reopens Hormuz, that would provide the perfect boost for a stock market rally that was beginning to look more than a little tired.”
