Oil Prices Plummet as Trump Suggests Iran War to End in Weeks

Global financial markets experienced a significant shift on Wednesday as oil prices plummeted and stock markets rallied following comments from US President Donald Trump. He suggested that the conflict in Iran would be resolved within 'two to three weeks'.

The international benchmark for oil, Brent crude, fell as low as $98.35 a barrel, marking a decline of over 15% from the previous day and its lowest level in a week. It later recovered slightly, trading down 2.5% at $101.

Stock markets in Asia saw substantial gains, with Japan's Nikkei surging 5%, South Korea's Kospi jumping 8%, Hong Kong's Hang Seng rising 2%, and China's CSI 300 index up 1.7%. European markets also followed suit, with the UK's FTSE 100 up 1.8% and the Europe Stoxx 600 index rising 2.2%.

Trump's comments on Tuesday sparked a relief rally in the US stock market, with the S&P 500 rising 2.9%. He stated, 'Now we're finishing the job. I think in two weeks or maybe a few days longer, we'll do the job. We want to knock out everything they've got.'

Market analysts are cautiously optimistic, with Emma Wall, chief investment strategist at Hargreaves Lansdown, noting that markets are 'choosing to believe the optimism from the White House.' However, she also warned that energy disruptions could continue for months, impacting inflation and economic growth.

The prospect of interest rate rises in the UK has diminished, with money markets pricing in about 41 basis points of increases to the UK bank rate by the end of 2026, down from 66 basis points anticipated on Tuesday.

The price of gold rose to its highest level in almost two weeks, up 0.8% to more than $4,700 an ounce.