NEW YORK, March 26 — Oil prices fell and stock markets rallied yesterday on reports of a US plan to end the war with Iran — which promptly rejected Washington’s overtures, according to state media.

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

Analysts pointed out, however, that the arrival of more US troops in the Middle East and fresh missile strikes between Iran and Israel suggested that the path forward was far from clear.

US President Donald Trump yesterday threatened to “unleash hell” if Iran did not strike a deal, but Tehran’s Foreign Minister Abbas Araghchi said his country did not intend to negotiate.

Moreover, an unnamed Iranian military official told local media that Tehran would target shipping in the Red Sea if the Washington launched a ground invasion.

While global shares rose modestly, oil prices dipped as the Brent crude benchmark was down 2.2 per cent at US$102.22 (RM405.71) a barrel, while West Texas Intermediate was also off 2.2 per cent at US$90.32 a barrel.

Earlier, crude futures had plunged more than 6 per cent.

Jack Ablin, from Cresset wealth management, said the stocks rally was driven by investors “really just latching on to any promising news right now.”

The equities push was “really related to oil prices going down and that anticipated end of the hostilities, or at least a settling down of hostilities.”

Crisis warning

As World Trade Organisation ministers prepared to meet in Yaounde, the head of the International Chamber of Commerce bluntly warned that the conflict could cause the “worst industrial crisis” in decades.

“The head of the International Energy Agency has warned that the world is facing an energy crisis more severe than the oil shocks of the 1970s,” said John Denton.

“From a business perspective, we believe this could yet become the worst industrial crisis in living memory.”

Offering respite to some countries, Tehran announced it would let oil vessels from “non-hostile” nations pass 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 closed in the green, with the Dow rising 0.7 per cent, the broader-based S&P 500 up 0.5 per cent and the tech-heavy Nasdaq adding 0.8 per cent.

In Europe, London, Frankfurt and Paris closed up just shy of 1.5 per cent ahead.

Asian markets closed with strong gains, led by Tokyo, which won nearly 3 per cent.

European Central Bank chief Christine Lagarde said the ECB has several options for dealing with the energy shock, vowing policymakers would not be “paralysed by hesitation.”

At its most recent meeting last week, the ECB kept interest rates on hold, while warning of higher inflation and lower growth in the eurozone owing to the war.

However, analysts have raised bets on the central bank hiking borrowing costs as soon as next month to try and keep the lid on an expected surge in consumer prices. — AFP