Oil Plunges Below $95 As The Dow Surges 1,300 In A Worldwide Rally After Ceasefire With Iran

NEW YORK (AP) — Oil prices fell below $95 a barrel and stock markets rose around the world Wednesday on the back of President Donald Trump withdrew his threat Destroy Iran.

The S&P 500 jumped 2.5% after Trump announced a two-week ceasefire with Iran, less than 90 minutes before Trump’s deadline to open the Strait of Hormuz and allow oil tankers into Iran. Exit from the Persian Gulf. The Dow Jones Industrial Average rose 1,325 points, or 2.8%, and the Nasdaq composite rose 2.8%, following even bigger gains in European and Asian stocks.

Of course, stock prices are still below pre-war prices. And oil prices It remains high because of the threat of a resumption of war. The ceasefire already looks unstable and Iran has closed it Strait of Hormuz Also on Wednesday, in response to Israeli attacks in Lebanon.

Such uncertainty caused some of the enthusiasm fueling financial markets to fade as Wednesday’s trading progressed, and financial markets sharp And sudden flashbacks since the war started.

“There is reason to be optimistic, but it’s too early to tell because, as you know, it’s Trump after all,” said Takashi Hiroki, chief strategist at MONEX.

So far in the war, Trump has set various deadlines for Iran to open the Strait of Hormuz, the main route for oil from the Persian Gulf to customers around the world, and has said he will only delay them, threatening to face major repercussions if Iran does not do so.

This is similar to a year ago when Trump threatened to impose stiff tariffs on imports from other countries on “Emancipation Day.” After several delays, his administration eventually negotiated lower tariffs with many countries; but it was still higher than before his second term. This has led some investors to claim that Trump is “always shy” or “TACO.” Financial markets are showing enough pain.

“Does kicking the can down the road, moving the goalposts, TACO Tuesday, or whatever metaphor we like just cause tempers to flare and the bombs to fall again?” Brian Jacobsen, chief economic strategist at Annex Wealth Management, asked about the two-week ceasefire with Iran. “Who knows? But for now it’s good enough to get a positive reaction from the markets.”

The barrel price of benchmark US crude fell 16.4 percent to settle at $94.41 after falling to almost $91 in early morning hours.

Brent crude oil, the international standard, fell 13.3% to $94.75 per barrel. It briefly rose above $119 during the height of concerns about war with Iran, but is still above its pre-war price of about $70.

The next moves in oil prices will depend on how many oil tankers can start leaving the Strait of Hormuz and how easy it will be for them to pass. Despite the White House’s claims that there was an increase in the number of ships passing through the strait on Wednesday, independent analysts say they have not seen any change in traffic in the strait.

Windward, a maritime intelligence firm that monitors international shipping, said all ships passing through the strait must still coordinate safe passage with Iranian officials, who charge fees as high as $1 per barrel for outgoing oil, paid in cryptocurrency. The largest supertankers carry up to 3 million barrels of crude oil.

White House press secretary Karoline Leavitt said the closure of the strait was “completely unacceptable,” reported by Iranian state media. He reiterated Trump’s “expectation and request” for the canal to be reopened.

In Asia, where countries are more dependent on oil from the Middle East, South Korea’s Kospi stock index rose 6.9%. Japan’s Nikkei 225 index rose 5.4% and Hong Kong’s Hang Seng index rose 3.1%.

European stock market indices rose at almost the same rate. While Germany’s DAX index gained 5.1%, France’s CAC 40 index gained 4.5%.

On Wall Street, companies with big fuel bills rallied to pare some of the steep losses experienced on concerns that oil prices will remain high.

United Airlines increased by 7.9%, reducing its loss for the year and coming into the day at 20.1%. Cruise ship operator Carnival rose 11.2%.

Delta Air Lines rose 3.7% after reporting stronger results than analysts expected in the latest quarter. CEO Ed Bastian said demand for flights remained strong and moves were being made to offset rising fuel bills. Delta became the latest airline on Tuesday increase baggage check fees.

Overall, the S&P 500 rose 165.96 points to 6,782.81. The Dow Jones Industrial Average rose 1,325.46 to 47,909.92 and the Nasdaq composite gained 617.15 to 22,635.00.

Treasury yields fell as hopes rose in the bond market that easing oil prices could allow the Fed to continue cutting interest rates later this year.

The yield on the 10-year Treasury note fell to 4.29% from 4.33% at the end of Tuesday. Low Treasury yields cause the prices of stocks, bonds and all other types of investments to rise. They should also mitigate some of the recent rise. mortgage rates and other loans taken out by U.S. households and businesses.

As oil prices rose rapidly due to the war, some traders said the Fed We will have to raise interest rates To control inflation. Now, according to data from CME Group, they see the probability that the Fed will continue to cut interest rates in 2026 as almost 25%.

AP journalists Yuri Kageyama, Matt Ott, Mayuko Ono, Jon Gambrell and Michael Biesecker contributed to this report.