Oil prices plunged and stocks surged as global investors breathed a sigh of relief after the U.S. and Iran agreed to a two-week ceasefire and President Trump backed off his threat to wipe out Iran's "whole civilization."
On Wall Street, the Dow Jones Industrial Average surged more than 1,000 points in early morning trade, while the S&P and Nasdaq also rallied, following strong gains in Asian and European stocks overnight.
Meanwhile, both U.S. crude futures, as well as Brent, the global benchmark, plunged amid hopes that ships could soon transit through the Strait of Hormuz, a crucial waterway through which about 20% of global oil flows. The strait had been virtually shut down by the war, sparking a global energy crisis.
The strong market reaction comes after Trump announced the ceasefire on social media Tuesday evening, less than two hours before a deadline he had imposed for Iran to meet his demands or face wide-scale destruction.
Wild swings in the markets
Trump's threat — and its reversal — marked the latest rhetoric to roil Wall Street and global investors since the U.S. and Israel attacked Iran more than a month ago.
Investors have swung from hope that Trump and Iran will de-escalate the war, to panic when it appears that the conflict is heating up, and back again.
Trump said his agreement to a ceasefire is contingent on Iran reopening the Strait of Hormuz immediately. It could take some time for global energy markets to recover, since some damage has already been done to oil refineries and other infrastructure in the Middle East.
The energy crisis sparked by the war with Iran has hurt consumers all over the world, including in the U.S., where national gasoline prices have risen above $4 per gallon.
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