Brent crude prices retreated and the FTSE 100 index opened higher on Wednesday as market participants reacted to reports that a diplomatic deal between the United States and Iran is being circulated.
The development marks a potential de-escalation in tensions that have weighed heavily on energy markets and global risk sentiment in recent days.
The price action reflects a rapid repricing of supply risk.
With the Strait of Hormuz closure threat receding, the immediate premium on oil has evaporated, allowing energy stocks to stabilize and broader equity markets to bid higher.
The cross-asset move underscores how quickly geopolitical risk premiums can unwind when diplomatic channels appear to reopen.
This follows a period of heightened volatility after US President Donald Trump previously threatened to 'take over' Iran following the Hormuz closure, which had sent oil prices surging and UK stocks lower.