United States stock markets hovered near record highs on Wednesday while oil prices dropped sharply amid growing hopes of a possible ceasefire agreement between the US and Iran.
The market rally came as negotiations between Washington and Tehran continued, with investors expecting that a successful deal could reopen the Strait of Hormuz and ease concerns over global oil and gas supply disruptions.
Oil prices fell after Iranian state media reported that a preliminary framework for a possible agreement had been obtained. According to the report, Iran could allow shipping traffic through the Strait of Hormuz to return to normal levels within 30 days, while the United States would lift its naval blockade on Iranian ports.
Following the report, US crude prices dropped by 5.5 percent to settle at $88.68 per barrel, while Brent crude fell to around $92 after trading above $100 last week.
The White House later dismissed the Iranian media report as false, calling it a “complete fabrication,” but markets remained relatively calm despite the denial.
The S&P 500 gained 0.1 percent and extended its record-breaking run, while the Dow Jones Industrial Average rose by 243 points. The Nasdaq composite also posted a slight increase.
This is not the first time markets have reacted positively to reports of progress between the two countries, only for optimism to fade later when negotiations stalled. However, recent statements from both sides have suggested that discussions may be closer to producing a deal than at any previous point.
US President Donald Trump said during a cabinet meeting that American officials were not yet fully satisfied with the proposed agreement but believed progress was being made.
Several major issues still remain unresolved, including the future of Iran’s highly enriched uranium stockpile, the country’s nuclear infrastructure, ballistic missile programme, and Tehran’s support for armed groups across the Middle East.
Questions also remain over whether the United States would agree to lift sanctions on Iran and release frozen Iranian assets as part of any final agreement.
Meanwhile, tensions in the region continue, especially in Lebanon, where Israeli military operations against Hezbollah have intensified in recent days.
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