Oil prices plummeted and U.S. stock futures surged after President Donald Trump announced he would hold off on his threat of devastating attacks on Iran.
U.S. crude oil futures fell more than 15 percent, while futures for the S&P 500 jumped 2.2 percent by 8:05 p.m. ET, and Dow futures rose 930 points or 2 percent.
President Trump’s decision, made late Tuesday, was contingent on Tehran agreeing to a two-week ceasefire and the reopening of the Strait of Hormuz.
He had previously threatened strikes on Iranian bridges, power plants, and other civilian targets. Iran’s Supreme National Security Council accepted the two-week ceasefire, with its foreign minister confirming passage through the strait would be allowed for the next two weeks under Iranian military management.
Futures for U.S. crude oil sank 14.7 percent to $96.27 a barrel, while Brent crude oil, the international standard, dropped 14.4 percent to $93.48. The price remains well above where it was at the start of the war.
Meanwhile, as trading in Asia got underway, Japan’s Nikkei rose more than 4 percent and South Korea’s Kospi gained 6 percent.
Earlier, U.S. stocks swung sharply during regular trading as uncertainty about the war with Iran increased after Trump had threatened that a “whole civilization will die tonight, never to be brought back again” if Iran does not meet his deadline at 8 p.m. Eastern time to open the Strait of Hormuz.
The S&P 500 fell as much as 1.2 percent but stocks rallied at the end of trading after Pakistan’s prime minister urged Trump to extend his deadline for another two weeks and asked Iran to open up the strait for the same amount of time.
The S&P 500 erased all its losses and ended with a modest gain of 0.1 percent. The Dow Jones Industrial Average dipped 85 points, or 0.2 percent, and the Nasdaq composite added 0.1 percent.
They’re the latest swings to hit financial markets since late February because of deep uncertainty about when the fighting may end.
Oil prices were likewise shaky. The price for a barrel of benchmark U.S. crude to be delivered in May briefly climbed above $117 before settling at $112.95.
Oil prices have spiked because the war has snarled the production and transportation of crude in the Persian Gulf. Much of that oil exits the gulf through the Strait of Hormuz to reach customers around the world, but Iran has blocked it to enemies.
The worry in markets has been that a long-term disruption will keep oil prices high for a long time and send a painful wave of inflation crashing through the global economy. Trump kept traders on edge by making a series of threats to blow up Iranian power plants only to delay several times.
The average price for a gallon of regular gasoline across the United States has leaped to $4.14, according to AAA. It was below $3 a couple days before the United States and Israel launched attacks to begin the war in late February.
In the bond market, Treasury yields eased on word of a potential cease-fire. The yield on the 10-year Treasury fell to 4.24 percent from 4.30 percent earlier Tuesday.
That’s still well above its 3.97 percent level from before the war, and the rise has pushed up rates for mortgages and other loans going to U.S. households and businesses, which slows the economy.
