Oil prices tumble, global markets rally on Middle East peace hopes

Crude futures plunged more than six per cent before barely creeping back - with Brent back just below $IOO - after US President Donald Trump voiced optimism at ending the war

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Oil prices tumbled and stock markets rallied on Wednesday on reports that the United States had sent a peace plan to Iran.

After nearly four weeks of conflict, investors jumped on signs that hostilities could be winding down, with the safe-haven dollar losing support.

"Oil prices have moved lower... offering some relief to equities that had been weighed down by worries over inflation," noted Matt Britzman, senior equity analyst at Hargreaves Lansdown.

"It's still a highly fluid situation. Trying to call how the rest of the week plays out would be unwise." The economic impact of the crisis has begun to bite around the world, with governments trying to cut energy consumption.

Offering respite to some countries, Tehran announced it would let oil vessels from “non-hostile” nations through the crucial Strait of Hormuz.

The head of the International Energy Agency, Fatih Birol, said he was “ready to move forward” with an additional release of oil reserves “if and when necessary”.

Wall Street moved cautiously into the green in early trading with the Dow up 0.6 per cent at 46,425.14 points.

The broader-based S&P 500 rose 0.4 per cent while the tech-heavy Nasdaq had added just shy of one per cent.

In Europe, London, Frankfurt and Paris were all up north of one per cent some two hours from the close.