Oil prices fell and stocks rose on Wednesday in a volatile trading session as investors seized on signs that the turmoil in the Persian Gulf may be easing.
On Tuesday night, President Trump said that he would pause the day-old U.S. operation to escort commercial ships through the Strait of Hormuz and cited what he called “great progress” toward a peace agreement with Iran. Oil prices plunged further, briefly dipping below $100 a barrel, after news reports on Wednesday that the Trump administration had made another proposal to end the war.
But oil retraced some of that decline after a spokesman for Iran’s parliamentary national security committee said that the reported proposal was “more a list of American wishes than a reality.”
The drop in oil prices may not continue, particularly if the latest developments turn out to be a false dawn, said Neil Atkinson, a senior fellow at the National Center for Energy Analytics and the former head of the oil division at the International Energy Agency.
“The oil market continues to degrade because the lack of supply crisis,” he added. “The oil market is burning, and economies — particularly in developing countries — are suffering great stress.”
Even as optimism among oil traders grew for a lasting end to the conflict, average gasoline prices in the United States jumped 5 cents a gallon to their highest levels since the war began, a reminder of the toll the fighting has taken on American consumers.
The president’s decision to halt the operation came as China’s foreign minister, Wang Yi, held talks with Iran’s foreign minister in Beijing on Wednesday, according to China’s official Xinhua news agency. China is a major buyer of Iranian oil and could use its influence to urge Tehran to maintain stability with Washington ahead of a planned summit next week between President Trump and China’s leader, Xi Jinping.
Oil prices slide.
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The price of Brent crude tumbled 6 percent to about $103 a barrel.
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West Texas Intermediate crude, the U.S. benchmark, fell 6 percent to around $96 a barrel.
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Investors and analysts are focused on the continued disruption to shipping in the strait, the narrow waterway between Iran and Oman that is a vital trading route for oil and natural gas and normally carries as much as one-fifth of the world’s oil supply.
Stocks gain.
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The S&P 500 rose 0.6 percent, pushing further into record territory, as trading resumed in the United States on Wednesday.
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In Europe, stocks gained. The Stoxx 600, a broad index that tracks the region’s largest companies, rose over 2 percent. Stocks in Germany and Britain also jumped.
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Stocks in Asia, where countries import vast quantities of oil and gas, were higher across the board. South Korea’s KOSPI index rose more than 6 percent, while stocks in mainland China rose more than 1 percent.
Gasoline and diesel prices rise.
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Gas prices rose again on Wednesday, jumping to a national average of $4.54 a gallon, according to the AAA motor club. The increase has raised the cost for drivers 53 percent since the war began.
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Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
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The average price of diesel ticked higher to $5.67 a gallon on Wednesday, up 51 percent since the start of the war.
What they are saying: Markets take hope that cease-fire is holding.
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The chief driver of the positive turn in the equity markets on Wednesday has been signals that the cease-fire in the Middle East is still in place, analysts at Deutsche Bank wrote in a research note.
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“This helped oil prices to come back down again and ease fears about a renewed escalation, with investors a bit more hopeful that an extended stagflationary shock would be avoided,” they added.
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Investor optimism was bolstered by the latest economic data in the United States, including job openings, which fell less than expected in March. This has “cemented the case that the conflict’s wider economic impact was still fairly muted” the bank analysts wrote.
Euan Ward and Sanam Mahoozi contributed reporting.
Gregory Schmidt is a Times business editor overseeing coverage of the European economy. He is based in London.
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