Oil prices fell sharply on Wednesday as hopes for a possible US-Iran agreement briefly eased concerns over the growing conflict in the Middle East.
Despite strong rhetoric from both Washington and Tehran, financial markets reacted positively to signs that diplomacy could still prevent a wider regional war.
US President Donald Trump said Iran was seeking a deal but warned the United States was prepared to “finish the job” if negotiations failed.
Speaking during a televised cabinet meeting at the White House, Trump also insisted the Strait of Hormuz would remain open to global shipping traffic.
He appeared to issue a warning to Oman, which has played a mediating role in the crisis, saying the Gulf nation would “behave just like everybody else.”
The comments underscored the fragile state of diplomacy as the conflict continues to unsettle energy markets and threaten key maritime trade routes.
Benchmark oil prices dropped by more than five percent after investors bet that a diplomatic breakthrough could still be possible.
Global stock markets mostly moved higher, while major US indices hit new highs amid lower Treasury yields and gains in technology shares.
Iranian officials also projected confidence, suggesting a renewed war was unlikely due to what they described as “enemy weakness.”
Senior Revolutionary Guards commander Mohammad Akbarzadeh said Iranian forces remained fully prepared, warning that troops were “lying in wait with full magazines.”
Iranian state media reported that Washington had proposed easing naval restrictions and restoring shipping through the Strait of Hormuz as part of a draft agreement.
The White House quickly denied the claim, calling the report “a complete fabrication” as tensions between the two sides continued.
Talks, reportedly facilitated through Pakistan, remain stalled over Iran’s nuclear programme and control of the strategic waterway.
In Lebanon, the conflict expanded further after Israel declared large areas south of the Zahrani River active combat zones and urged civilians to leave.
The escalation added pressure to an already fragile ceasefire between Israel and the Iran-backed group Hezbollah.
Across the region, residents continue to face deep uncertainty, watching each night to see whether diplomacy or further violence will shape the next chapter of the crisis.
