Stocks surged and oil prices fell sharply after President Donald Trump announced that the US and Iran had reached an agreement to reopen the Strait of Hormuz, raising hopes that a months-long conflict disrupting global energy markets could be nearing an end.
Trump said the deal would be formally signed on Friday, with the strategically important waterway reopening the same day. Iran also indicated that military operations would end as part of the agreement, according to state media.
Markets reacted positively to the news. The Nasdaq 100 jumped more than 3%, the S&P 500 gained 1.7%, and the Dow rose nearly 470 points. Meanwhile, oil prices dropped more than 4% as traders anticipated a recovery in global energy supplies.
The Strait of Hormuz handles roughly one-fifth of the world's oil and liquefied natural gas shipments. Its closure earlier this year contributed to a spike in energy prices, higher inflation, and increased economic uncertainty worldwide.
While investors welcomed the breakthrough, analysts cautioned that the agreement includes a 60-day ceasefire period during which both sides must negotiate a broader and more permanent settlement. Some warned that significant challenges remain before long-term stability can be assured.