Benchmark oil futures tumbled and Wall Street equity futures surged on Wednesday morning, after US President Donald Trump said he agreed to suspend bombing on Iran for a period of two weeks, subject to Iran agreeing to open the Strait of Hormuz.
“We received a 10-point proposal from Iran, and believe it is a workable basis on which to negotiate,” Mr Trump posted to his Truth Social channel.
“Almost all of the various points of past contention have been agreed to between the United States and Iran, but a two week period will allow the Agreement to be finalized and consummated.”
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Iran has yet to officially respond to the proposed two-week peace deal. Brent crude oil futures tumbled 6 per cent on the news to $US102.61, with US WTI oil down nearly 7 per cent to $US102.88. Gold also jumped 1.3 per cent to $US4770 an ounce.
The Australian dollar rose 1.6 per cent to buy $US70.2 cents.
Government bond yields also fell as traders priced in a potential deal that could ease worries that soaring energy prices will lift inflation.
President Trump signalled that the deal with Iran had been negotiated by Prime Minister Shehbaz Sharif and Field Marshal Asim Munir of Pakistan.
Australian share futures pointed up 0.2 per cent before the news of the potential agreement, although the market is likely to open higher in reflection of the news.
