Oil prices briefly fell below $100 a barrel on Wednesday after President Donald Trump said the US will leave Iran in ‘two to three weeks,’ according to the BBC. This statement came ahead of a speech where Trump will ‘provide an important update on Iran.’

Market Reactions to Trump’s Comments

Following Trump’s announcement, European stock markets opened higher. In the UK, the FTSE 100 index rose 1.3%, while Germany’s Dax climbed 2.1% and France’s Cac added 1.8%. In Asia, Japan’s Nikkei 225 index closed 5.2% higher, and South Korea’s Kospi surged 8.4%.

Shares in Asia and Europe rallied as investors reacted to the possibility of a swift end to the conflict with Iran. Hong Kong’s Hang Seng rose 2%, and China’s CSI 300 index increased by 1.7%. European markets followed suit, with the UK’s FTSE 100 closing 1.8% higher, its biggest one-day gain in nearly a year.

Impact of the Iran Conflict on Oil Prices

Since the US-Israel war with Iran began, oil and gas prices have surged after Tehran threatened to attack vessels using the Strait of Hormuz. This key shipping route is important for global energy supply, and any disruption has driven prices higher.

On Wednesday, QatarEnergy reported that a fuel oil tanker it leased had been hit by a missile attack. The company stated that none of the crew members were injured, and there was no environmental impact from the incident. Qatar’s Ministry of Defence confirmed that Iran had fired three cruise missiles, two of which were intercepted, while the third struck the tanker.

Oil prices have surged as much as 64% in March, reaching nearly $120 a barrel, the largest monthly gain since 1990. According to Nicolas Daher from the Economist Intelligence Unit, this spike mirrors the energy supply shock caused by Iraq’s invasion of Kuwait in 1990.

The latest increase in oil prices has been driven by expectations that the conflict will continue until at least the end of April. Daher noted that this expectation has kept energy markets in a state of flux. Oil refiners are also bidding more aggressively for crude as they try to boost production amid global shortages of jet fuel and diesel, according to Ole Hansen from Saxo Bank.

Continued Fighting and Market Uncertainty

The fighting has continued in the Middle East, with Lebanon’s capital Beirut hit by airstrikes on Tuesday. Israel’s military stated it was targeting a senior Hezbollah figure. This ongoing conflict has kept financial markets in a state of uncertainty.

Trump, speaking from the Oval Office on Tuesday, said Iran is ‘begging to make a deal’ but that whether a deal is reached is ‘irrelevant’ to America’s timetable. He added that the US wants to ‘knock out everything they’ve got.’

Emma Wall, chief investment strategist at Hargreaves Lansdown, said that markets are ‘choosing to believe the optimism from the White House.’ She noted that while Trump’s comments suggest a swift US exit from the region, energy disruption may continue for some months, potentially impacting inflation and economic growth.

Meanwhile, investors have started to reduce their bets on UK interest rate hikes this year. Money markets now price in about 41 basis points of increases to the UK bank rate by the end of 2026, down from 66 basis points anticipated earlier in the week. This suggests a shift in expectations regarding future monetary policy.

The price of gold, which had risen by 3.5% on Tuesday, climbed another 2.5% on Wednesday to its highest level in nearly two weeks, reaching more than $4,786 an ounce.