Oil prices took a nosedive on Wednesday while global stock markets surged, fueled by optimism over potential progress in negotiations between the United States and Iran to reopen the Strait of Hormuz for oil shipments. The price of Brent crude oil plummeted by 7.8% to slightly above $100 per barrel, sliding from over $115 earlier in the week.
The market reaction came as President Donald Trump hinted on social media about the possibility of the Strait of Hormuz being “OPEN TO ALL” if Iran agrees to an undisclosed deal. The ongoing conflict with Iran has obstructed oil tankers from using the strait to exit the Persian Gulf, causing disruptions in the global economy. A resolution could alleviate inflationary pressures that have been driving up prices across various sectors worldwide.
On Wall Street, the S&P 500 surged by 1.5%, marking its strongest performance in nearly a month and hitting a new record high. The Dow Jones Industrial Average soared by 612 points, a 1.2% increase, while the Nasdaq composite also reached a new record, climbing by 2%.
In Canada, the S&P/TSX composite index closed up approximately 1.2% at 33,981.82. Overseas markets saw even larger gains, with indexes in Seoul jumping by 6.5%, Paris by 2.9%, and London by 2.1%.
Despite the positive market sentiment, uncertainties remain as previous hopes for a resolution with Iran have been dashed before. Oil prices, which initially dipped below $97 per barrel, rebounded above $100 following Trump’s warning of heightened military action if Iran fails to comply with the agreement.
Market optimism was further buoyed by Trump’s decision to pause efforts to forcefully reopen the Strait of Hormuz and China’s call for a comprehensive ceasefire after discussions with Iran’s foreign minister, given the significant economic and political ties between China and Iran.
Amidst the geopolitical developments, several major U.S. companies have reported stronger-than-expected profits for the beginning of 2026, providing support to the stock market. Chipmaker AMD led the market rally with an 18.6% surge, attributing its success to the growing demand for artificial intelligence technology. Other companies in the AI sector, such as Super Micro Computer and Nvidia, also posted robust earnings, driving market optimism.
Additionally, companies heavily reliant on fuel costs saw gains as hopes for easing oil prices prevailed. United Airlines, Carnival, and Royal Caribbean all experienced notable increases in their stock prices. In the bond market, Treasury yields declined as falling oil prices alleviated inflation concerns, with the 10-year U.S. Treasury yield dropping to 4.35% from 4.43% the previous day.