Oil prices experienced a decline on Wednesday, while global stock markets saw a rally amid optimism surrounding a potential agreement between the United States and Iran that could enable the resumption of crude oil deliveries from the Persian Gulf to customers.
The price of Brent crude oil, the global benchmark, dropped by 7.8% to slightly over $100 per barrel, compared to over $115 earlier in the week. This drop came following a statement by U.S. President Donald Trump on social media suggesting that the Strait of Hormuz might be accessible to all if Iran agrees to an undisclosed reported deal.
The closure of the narrow strait due to the conflict with Iran had disrupted the global economy by hindering oil tanker movements out of the Persian Gulf. Reopening the strait could facilitate the free flow of oil and alleviate inflationary pressures that have been contributing to price hikes across various products worldwide.
In the financial markets, the S&P 500 surged by 1.5%, achieving its strongest performance in nearly a month and reaching a new record high. The Dow Jones Industrial Average also climbed by 1.2%, adding 612 points, while the Nasdaq composite set its own record with a 2% increase.
By the close of trading, Canada’s S&P/TSX composite index had risen by approximately 1.2% to 33,981.82. Overseas stock markets also witnessed significant gains, with Seoul’s index surging by 6.5%, Paris by 2.9%, and London by 2.1%.
Although optimism has periodically emerged on Wall Street regarding a potential resolution to the conflict with Iran, such hopes have often been dashed swiftly. Despite this, the financial markets seemed encouraged by recent developments. Trump’s decision to halt efforts to forcefully open the Strait of Hormuz, paired with China’s call for a comprehensive ceasefire following discussions with Iran, were perceived as positive signals.
Major U.S. corporations have been reporting stronger-than-expected profits for the beginning of 2026, bolstering market sentiment amidst ongoing uncertainties related to the conflict. Companies like AMD and Super Micro Computer in the artificial intelligence sector, as well as chip giant Nvidia, have seen substantial stock gains due to robust financial performance. Additionally, businesses reliant on fuel costs, such as United Airlines, Carnival, and Royal Caribbean, benefited from hopes of continued easing in oil prices.
In the bond market, Treasury yields declined as the drop in oil prices alleviated inflation concerns, with the yield on the 10-year U.S. Treasury falling from 4.43% to 4.35% by the end of Wednesday’s trading session.