Global financial markets breathed a sigh of relief on Wednesday, with European and Asian stocks rallying and oil prices briefly dipping below the $100 threshold. The sudden market shift followed President Donald Trump’s declaration that the United States will withdraw from the Iran conflict within weeks, regardless of diplomatic outcomes.
Brent crude temporarily retreated to $98.65 a barrel before stabilizing around $101. The price fluctuation comes just hours ahead of a highly anticipated evening address where the president is expected to deliver a major update on the ongoing crisis.
Investors responded enthusiastically to the prospect of de-escalation. In Europe, the UK’s FTSE 100 climbed 1.3%, while Germany’s Dax and France’s Cac indices surged by 2.1% and 1.8%, respectively. The financial reaction was even more dramatic in Asia, a region heavily dependent on Middle Eastern energy imports. Japan's Nikkei 225 skyrocketed by 5.2%, and South Korea's Kospi leaped an impressive 8.4%.
Speaking from the Oval Office on Tuesday, Trump asserted that American forces would leave the region in "two to three weeks" whether a peace agreement is struck or not. He claimed Tehran was "begging to make a deal," though he dismissed the outcome of negotiations as "irrelevant" to Washington's withdrawal timeline.
On the other side of the conflict, Iranian President Masoud Pezeshkian signaled his country's readiness to end hostilities. However, he insisted that Tehran must receive concrete guarantees to prevent any future military aggression before a truce can be finalized.
Despite the diplomatic posturing, the region remains extremely volatile. Early Wednesday, a QatarEnergy-leased fuel tanker was struck in a missile attack. Qatar's Ministry of Defense reported that Iran fired three cruise missiles; while two were intercepted, the third hit the vessel. Officials confirmed that no crew members were injured and that the strike caused no environmental damage.
The broader US-Israel war with Iran has severely disrupted global trade, particularly after Tehran threatened commercial vessels navigating the critical Strait of Hormuz. Regional violence also continues unabated, with Israeli airstrikes pounding the Lebanese capital of Beirut on Tuesday in an effort to eliminate senior Hezbollah leadership.
The conflict's toll on energy markets has been historic. In March, oil prices skyrocketed by up to 64%, peaking near $120 a barrel. According to Nicolas Daher of the Economist Intelligence Unit, the dramatic spike marked the most severe monthly energy shock since Iraq's 1990 invasion of Kuwait. Adding to the strain, Saxo Bank's Ole Hansen noted that global shortages of diesel and jet fuel have forced refineries into aggressive bidding wars for crude, further squeezing a highly strained global supply chain.