Oil prices dropped sharply on Wednesday after Donald Trump said the Strait of Hormuz could reopen fully if Iran agrees to a deal with the United States. Global stock markets also moved higher as investors hoped tensions in the Middle East could ease after months of conflict and shipping disruptions. Trump shared the update on social media. He said the war with Iran could end if Tehran accepts the terms already discussed with Washington. The US president wrote that the Strait of Hormuz would become “open to all” if Iran accepted the agreement. He added that the US blockade around the region could end under the proposed deal. However, Trump also warned that military action could increase if Iran refused to cooperate. He said bombing campaigns would restart at a “much higher level and intensity” if talks failed. The Strait of Hormuz is one of the world’s most important shipping routes. Around one-fifth of the global oil supply moves through the narrow waterway each day. Iran has blockaded the area since late February, creating major pressure on energy markets worldwide. Earlier this year, the US launched “Project Freedom,” a military operation designed to escort ships safely through the strait. Trump said he would pause the operation for a short time while final negotiations continue. Even though escort missions may stop temporarily, Trump said the US blockade on Iranian ports would remain active. Iran’s Revolutionary Guards Navy later responded through state media. Officials said safe passage through the strait could continue if US threats came to an end and new procedures were respected. The statement did not explain what the new procedures would involve. Iranian officials also thanked ship captains and shipping companies for following local rules while crossing the area. Brent crude oil prices dropped as much as 11% during trading and briefly fell below $100 a barrel for the first time since April. Oil prices had jumped earlier this week after fresh fighting in the Middle East increased fears over supply shortages. At one point, Brent crude traded near $97 per barrel before recovering slightly later in the day. Wholesale gas prices in Britain also moved lower. The British June gas contract fell more than 6%, helping ease concerns about rising energy costs in Europe. Airline company shares climbed as investors hoped lower fuel costs and safer travel routes could improve global travel demand. The decline in oil prices became stronger after reports suggested the White House was close to reaching an early agreement with Iran. According to Axios, US officials believe both sides are discussing a one-page memorandum that could create a framework for future nuclear negotiations and help end the conflict. Still, Iranian officials pushed back against those reports. Tehran described the proposal as an “American wishlist” and said no final agreement had been reached. Oil prices later recovered some losses and traded around $101 per barrel by the end of the session. Stock markets across Europe reacted positively to the easing tensions. The FTSE 100 in the United Kingdom rose 2%, while France’s CAC 40 climbed 3%. Germany’s DAX also moved more than 2% higher. Global markets gained strength as investors returned to riskier assets. MSCI’s world stock index reached another record high. Asian markets also posted strong gains, especially in South Korea. The Kospi index in Seoul surged more than 6% and crossed the 7,000 mark for the first time. Shares of Samsung Electronics jumped nearly 15% as excitement around artificial intelligence stocks continued. On Wall Street, the S&P 500 rose almost 1.5% after setting a record high the previous day. Meanwhile, bond markets also showed signs of relief. Long-term UK government borrowing costs fell slightly after reaching their highest levels in decades earlier this week. Gold prices, often seen as a safe investment during global uncertainty, climbed 3% to around $4,695 an ounce. The situation in the Strait of Hormuz remains tense despite the market optimism. French shipping company CMA CGM confirmed that one of its ships, the San Antonio, was attacked while passing through the Strait on Tuesday. The company said crew members were injured and the vessel suffered damage during the incident. Market experts say investors are hopeful but still cautious. Susannah Streeter, chief investment strategist at Wealth Club, said financial markets are reacting positively because investors believe a larger conflict may now be avoided. She added that easing oil prices could also help reduce future inflation pressure if a lasting agreement is reached.