Oil and gas prices plunged, stock markets soared and the US dollar retreated on Wednesday after the United States and Iran agreed to a temporary ceasefire that could lead to the Strait of Hormuz reopening.

The most widely traded oil contracts fell some 15 percent to around US$95 a barrel, after more than a month of conflict that killed thousands and hammered global markets.

But on Wednesday, investor relief sent markets soaring, with Wall Street's three main indexes climbing more than 2.5 percent.

Europe's main continental bourses all closed up more than three percent. Frankfurt led the way with a five-percent gain while London gained 2.5 percent, held back by weak oil companies.

But traders warned that the euphoria could be short-lived. Both sides have threatened to resume hostilities if the two-week pause does not lead to an agreement.

Fractures of the deal started to emerge as Israel launched its heaviest bombardment of Lebanon since Hezbollah joined the war in early March, killing at least 254 and wounding hundreds across the country, according to authorities.

Oil prices remain much higher and equity prices lower than before the United States and Israel attacked Iran on February 28.

Maritime monitor Marine Traffic noted that only two ships had transited the Strait of Hormuz since Iran agreed to reopen it, through which about 20 percent of the world's oil passes.

Shipping journal Lloyd's List estimated that around 800 ships have been stuck in the Gulf since the end of February.

The International Air Transport Association said that it would take months for jet fuel supplies and prices to normalise.

Shares of oil producers fell sharply while airlines were among the biggest beneficiaries.

The S&P 500 rose 2.5 percent, to 6,782, the Dow rose 2.9 percent, to 47,909, while the Nasdaq rose 2.8 percent, to 22,635. (AFP) (AFP)



Edited by Azam Khan