The stock market soared today as a relieved City cheered the ceasefire in the Middle East and oil prices slumped.
Within the first few minutes of trading the FTSE 100 index of leading British company shares shot up 265 points, or 2.56 per cent to 10,613.
Among the biggest risers were mining stocks, travel companies such as British Airways’ owners IAG, up almost 10%, and Rolls-Royce, which supplies engines to airlines, which saw a 9.5% push.
The City opening came after some Asian markets jumped even more sharply with Japan’s Nikkei 225 adding 5%.
On Wall Street the Dow Jones index is expected to open more than 1000 points higher this afternoon.
The surge came after President Trump said in a Truth Social post late last night that he has agreed to a two week suspension of attacks on Iran subject to the reopening of the Strait of Hormuz.
He had earlier set a deadline for midnight London time threatening that "a whole civilisation will die tonight" if no deal was reached.
Iranian Foreign Minister Abbas Araghchi said on social media that Tehran agreed to a ceasefire "if attacks against Iran are halted", saying that safe passage through the Strait of Hormuz "will be possible".
That will allow dozens of oil tankers that have been trapped in the Gulf of Persia for more than a month to start moving to towards their destinations again.
However, the oil price remains well above the $70 seen before the conflict began and futures markets suggest it is not expected to fall back to pre-war levels this year.
The news was greeted with euphoria in energy markets with the benchmark price of a barrel of Brent Crude falling 15% to $92.77 while WTI Crude, a proxy for prices in the domestic US market, dropped 16% to $94.78.
Gas prices also fell with the May contract for British natural gas dropping more than 16% to 112.27p per therm.
The slump should bring some limited relief for drivers although it is likely to be a week before forecourt petrol and diesel prices start to ease. However the threat of outright shortages and fuel seem to have been averted for now.
James Hosie, Equity Analyst at Shore Capital said: "A two-week ceasefire agreement between the US, Israel and Iran including the opening of the Strait of Hormuz marks a welcome step back from the threatened escalation of the conflict.
“Oil markets reflect that relief with near-term Brent prices dropping around 15% overnight. Even if this ceasefire becomes a more lasting peace agreement, we do not expect oil and gas prices to return to their pre-conflict levels as it will take time for industry operations in the Persian Gulf to normalise."
However, some analysts sounded a note of caution. Neil Crosby, AVP Oil Analytics at energy and freight data company Sparta said: “ If one is forced to take an opinion on the way forward, then my base case would be price risk starts to build again over the next two weeks.
“Iran’s 10-point plan looks an unacceptable deal for the US and almost everybody else and on that basis means a small chance that transits into Hormuz will be allowed to rise to anything substantial enough to make a dent in the problem."
This article was written by Jonathan Prynn from The Evening Standard and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.