Global financial markets surged on Wednesday after a two-week ceasefire between Iran and the United States sparked optimism that energy flows through the Strait of Hormuz could soon resume.
Iran Guarantees Two-Week Safe Passage in Hormuz as US Agrees to Ceasefire, Islamabad Talks Set
The breakthrough, announced by US President Donald Trump, came just hours before a looming deadline for Tehran to reopen the vital shipping lane or face widespread military strikes. The agreement helped calm weeks of geopolitical tensions that had disrupted global markets and driven energy prices sharply higher.
Oil markets reacted immediately, with US crude futures plunging around 15% to $96.31 per barrel, while Brent crude dropped roughly 13% to $95.36. The decline reflects renewed confidence that oil and gas shipments—nearly 20% of global supply that passes through the Strait of Hormuz—could stabilise in the near term.
Equity markets also rallied strongly. Futures for the S&P 500 rose more than 2%, while European stock futures jumped over 5%. In Asia, Japan’s Nikkei surged about 5% and South Korea’s KOSPI climbed 6%, briefly triggering a trading halt.
Meanwhile, the US dollar weakened broadly after serving as a safe-haven asset during the conflict. Risk-sensitive currencies, including the Australian dollar and the euro, posted gains, reflecting improved investor sentiment.
Despite the rally, analysts cautioned that uncertainty remains high. Market participants are closely watching whether the ceasefire evolves into a longer-term peace agreement, which would be necessary to sustain confidence and restore normal shipping activity through the Strait of Hormuz.
The six-week conflict had previously fueled inflation fears and disrupted global economic outlooks, with governments and businesses scrambling to manage rising energy costs. While the ceasefire offers short-term relief, experts warn that unresolved geopolitical tensions could still trigger further volatility in the weeks ahead.
