Oil prices tumbled and stocks rallied on Wednesday on hopes of a de-escalation of the Middle East war after Washington sent a peace plan to Iran, while Tehran announced it will let “non-hostile” oil vessels through the crucial Strait of Hormuz.
After nearly four weeks of conflict, investors jumped on the first signs that hostilities could wind downthough analysts pointed out that the arrival of more US troops in the region suggested the chance of escalation remained.
Oil Plunges
Both main crude contracts plunged more than six percent , with Brent Crude falling back below $100 .
On Wednesday morning, Brent was trading around the $95 mark .
“They did something yesterday that was amazing, actually. They gave us a present, and the present arrived today. And it was a very big present worth a tremendous amount of money,” President Donald Trump told reporters.
He did not explain further but said it related to the Strait of Hormuz.
Trump said he sent a plan and that it “all starts with, they cannot have a nuclear weapon.”
The Peace Plan
The New York Times quoted unnamed officials saying the 15-point proposal was sent through Pakistan.
Israel’s Channel 12 reported that Trump was suggesting:
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A one-month ceasefire
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Discussion on handing over Iran’s enriched uranium and banning further enrichment
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Safe passage through the Strait of Hormuz
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An end to all sanctions
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Assistance in developing civil nuclear energy
Iran’s Response
Tehran, in a message circulated by the International Maritime Organization, assured safe passage through the strait to “non-hostile vessels.”
Iran had already said it was not targeting friendly nations.
However, Tehran has not confirmed any formal talks.
Markets Rally
Equity traders pounced on the developments:
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Tokyo and Seoul spiked more than three percent
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Hong Kong, Sydney, Shanghai, Singapore, Wellington, and Taipei also rallied
Latest Developments
Strikes continue:
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Iran’s Revolutionary Guards fired missiles and drones at military bases hosting US forces in Kuwait, Jordan, and Bahrain, as well as targets in Israel
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Drones hit a fuel tank at Kuwait International Airport
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Israeli strikes killed at least nine people in Lebanon
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Missiles from Iran targeted Israel, with blasts heard in Jerusalem
Nuclear plant hit:
The UN nuclear watchdog said Iran informed it that “another projectile hit the premises” of the Bushehr nuclear power plant on Tuesday, without damaging it.
US troops deploying:
The United States is planning to send some 3,000 soldiers from its elite 82nd Airborne Division to the Middle East to support operations against Iran, US media reported.
Diplomatic efforts:
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China’s top diplomat told his Iranian counterpart that “talking is always better than to keep fighting”
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France’s President called on Iran to “engage in good faith” in talks
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Pakistan offered to host negotiations
Iran arrests:
Iranian authorities said 466 people have been arrested, accused of seeking to destabilise the country through their online activity.
The Bottom Line
Oil is down. Stocks are up. Trump says a deal is possible.
But US troops are still deploying. Strikes are still hitting. And analysts warn that the chance of escalation remains.
The war may be winding downor just catching its breath.
