Oil prices surged on Thursday after US President Donald Trump threatened more heavy strikes on Iran, while global equity markets reacted indecisively to the latest developments in the conflict.

In a prime-time address on Wednesday night, Trump warned that more bombing could take Iran "back to the Stone Ages" but offered no solution on the reopening of the Strait of Hormuz, a key shipping lane for the world's oil and gas.

Oil prices shot higher, lifting both major benchmarks to about US$110 a barrel by the end of the day.

"Trump's much-anticipated address delivered little to nothing new on potential timelines or conditions for ending hostilities against Iran," said Deutsche Bank managing director Jim Reid. "There was no signal of the US seeking an imminent off-ramp out of the war."

US stocks began the session sharply lower, but later regained their footing, with two of the three major indices ending narrowly positive.

"It's as if the equity market is a bigger believer that we're closer to the off-ramp than the oil market," said Art Hogan of B Riley Wealth Management.

After being down more than one percent, European markets closed mixed, with London higher and Paris and Frankfurt slightly lower.

Signs of de-escalation had buoyed markets in recent sessions, but Trump's speech dashed those hopes.

As time passes, markets are treating Trump's statements with greater scepticism, said Dave Grecsek, managing director at Aspiriant Wealth Management.

"Initially there was a lot more weight attached to his comments, whether this was related to tariffs or what happened in Venezuela or in Iran," he said.

But "at some point, the markets are going to start to question the veracity of some of his statements," he added.

London finished 0.6 percent higher, boosted by oil companies BP and Shell rising almost three percent.

Paris dropped about half a percent, even as oil giant TotalEnergies was up almost three percent on reports it made a US$1 billion profit in March trading petroleum products.

Most markets in Europe and the United States are closed on Friday for Good Friday.

World Bank Managing Director Paschal Donohoe said he was fearful about the global economic impact of the crisis.

"We are extremely concerned regarding the effect that this will have on inflation, on jobs and on food security," he said as the World Bank partners with the International Monetary Fund and International Energy Agency to coordinate aid responses. (AFP)



Edited by Robert Kemp