Dow Jones

Wall Street and Oil Markets React to Peace Signals

US stock markets climbed on Thursday as investors reacted to the possibility of a diplomatic resolution to the conflict in the Persian Gulf. According to 1news.co.nz, the S&P 500 jumped 1.3% following the announcement, while the Dow Jones Industrial Average rose 802 points, or 1.6%, by mid-afternoon Eastern time. The Nasdaq composite also saw gains, increasing 1.8%. The prospect of a deal to end the war has provided immediate relief to energy markets. Hopes that the global flow of oil can resume through the Strait of Hormuz sent benchmark prices lower:

• US crude fell 2.8% to US$87.56 per barrel.
• Brent crude, the international standard, fell 3.5% to US$89.84 per barrel.

Despite the recent drop, Brent crude remains significantly higher than its roughly US$70 price point from before the war began on February 28.

The Rapid Shift from Military Threats to Diplomacy

The market rally follows a period of extreme volatility driven by the US administration’s shifting rhetoric. Earlier on Thursday, President Trump used social media to threaten a major escalation, vowing to hit Iran “very hard” and promising to take control of the country’s energy infrastructure. As BBC reported, Trump stated in a post on Truth Social that the US would be “taking Kharg Island,” a major oil terminal off the Iranian coast, in the “not too distant future.” He further claimed the US would “assume total control of their oil and gas markets,” drawing a comparison to previous actions in Venezuela. However, the administration pivoted sharply within hours. Trump later announced that the scheduled military operations had been called off because discussions with Iranian leadership had reached an approval stage.

“I have cancelled the scheduled strikes and bombings against Iran tonight.

While Trump indicated that final points of a deal have been “approved in both concept and great detail” by various parties—including Israel, Pakistan, and several Arab and Gulf nations—he noted that the US naval blockade of Iranian ports would “remain in full force and effect” until the transaction is finalized.

Disputed Approval: Tehran Rejects Settlement Claims

The legitimacy of the proposed settlement remains a point of intense contention. While the White House suggests a deal is imminent, official voices from Tehran have dismissed the claims of an agreement. According to RNZ, Iran’s Fars news agency cited an unnamed source claiming that Tehran has not yet approved any text for an initial memorandum of understanding with the United States. Furthermore, the Tasnim news agency dismissed the US president’s announcement, stating that any news regarding a potential understanding should be viewed in the context of previous declarations that failed to reach an outcome. Trump, speaking from the Oval Office, suggested a signing could occur as early as this weekend in Europe. “The strait will officially open as soon as we sign, which could be soon, very soon, maybe over the weekend in Europe,” he told reporters.

Broader Economic Drivers: AI Stocks and Inflationary Pressures

The geopolitical volatility in the Middle East is occurring alongside significant shifts in the technology sector. While the Iran situation heavily influenced oil, some analysts noted that artificial intelligence stocks have been the primary driver of recent US market swings. The AI sector has experienced extreme fluctuations, with companies moving from record highs to sudden declines. For example, Marvell Technology climbed 6.3% on Thursday, attempting to recover from a period of intense volatility that included a 16.7% plunge and a 32.5% single-day surge. These market movements come as global central banks grapple with inflation driven by high energy costs. The European Central Bank recently became the first major central bank to raise interest rates in response to rising wholesale prices. High interest rates present a dual challenge: while they aim to curb inflation, they can also suppress investment in expensive sectors like artificial intelligence and slow overall economic growth.

Find more reporting in our News section.