Oil prices remained volatile on Wednesday, as the US and Iran clashed over what terms might bring the conflict in the Middle East to an end.
Brent crude rose to $101 a barrel at midday in the US before falling back to $98 as President Donald Trump spoke optimistically about the possibility of reaching a deal.
But Iranian media on Wednesday cited leaders criticising the US peace proposal.
They presented their own terms for a ceasefire, including international recognition of Iran’s “sovereign right” to control the Strait of Hormuz, a key route for global oil and gas supplies.
On Wednesday, White House press secretary Karoline Leavitt maintained that US attacks were working to convince the Iranian regime to negotiate.
She said failure to reach an agreement would be a result of the Iranian regime refusing “to understand they have already been defeated”.
The distance between the two sides could prolong a conflict that has rocked financial markets and sent energy prices soaring since the US and Israel attacked Iran on 28 February.
Iran has effectively blocked the Strait of Hormuz since the start of the war, cutting off a waterway that usually sees about 20% of the world’s oil and liquefied natural gas pass through each day.
It has generated a supply crisis, forcing countries in Asia – the main destination for oil from the Gulf – to take unusual measures to try to secure oil and gas supplies.
Philippine President Ferdinand Marcos declared a state of emergency in his country, which imports 98% of its oil from the Gulf, while on Tuesday, the boss of energy giant Shell said oil shortages could hit Europe next month.
Larry Fink, the boss of US financial giant BlackRock, told the BBC that a global recession could be triggered if the price of oil hits $150 a barrel.
But hopes that momentum might be building to reach resolution have helped to boost investor spirits and ease oil price pressures.
In the US, the main indexes closed higher with the Dow Jones up 0.6% and the Nasdaq 0.7% ahead. The S&P 500 finished marginally higher.
In the UK, the FTSE 100 was 1.4% higher after trading ended. Germany’s Dax index rose 1.3% and in France, the Cac gained 1.1%.
Overnight, major stock exchanges in the Asia Pacific closed higher. Japan’s Nikkei 225 ended 2.8% up and South Korea’s Kospi index rose 1.5%.
Both countries are heavily reliant on oil that passes through the Strait of Hormuz.
Australia’s ASX 200 index was up by more 1.8%. Hong Kong’s Hang Seng and Shanghai’s composite each gained by around 1%.
In a message posted by its mission to the United Nations on Tuesday, Iran had said it would allow “non-hostile vessels” to pass through the Strait of Hormuz, provided they coordinate with “the competent Iranian authorities”.
The statement came after some countries appeared to have negotiated safe passage for their vessels despite Tehran threatening to target ships that tried to use the channel.
The US also lifted sanctions on Iranian oil on Friday, a move it said would help ease the supply crunch.
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