Oil plunges, markets surge on report U.S. and Iran near deal to end war as gas prices jump past $4.50

The price of oil plunged and stocks surged early Wednesday after a new report that the U.S. believed it was nearing a deal to end the war with Iran and eventually reopen the Strait of Hormuz.

Officials in Washington and Tehran were working on "a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations," according to the report from Axios, which cited two U.S. officials and two additional sources.

A spokesperson for Iran's foreign ministry told Iranian news outlet ISNA that a U.S. proposal was currently under review, and said that Iran planned to convey its assessment of it to mediator Pakistan.

Meanwhile, Iran's navy said in a post on X Wednesday morning that “with aggressor’s threats neutralized & new protocols in place, safe, stable passage through SOH will be ensured.”

President Donald Trump, in his own post minutes later, said the war would end and the strait would reopen "assuming Iran agrees to give what has been agreed to, which is perhaps a big assumption." He warned Tehran to agree to his terms or "the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before."

Markets had reacted swiftly to the initial report, sending the price of U.S. crude oil plunging by as much as 15% to $88 per barrel and international Brent crude oil down as much as 11% to $96 per barrel.