Dow hits record high as Iran deal hopes ease oil fears

Reports that Iran and Oman are in the final stages of an agreement to reopen the Strait of Hormuz to commercial shipping buoyed investor sentiment on Thursday, helping push the Dow Jones Industrial Average to fresh record highs and keeping oil prices range-bound below $80 per barrel as traders grew less fearful of a sustained energy supply disruption.

A Deal Takes Shape

According to Reuters Thomson Reuters Corporation ↗ 1.56%, the proposed arrangement would give Iran control over ships entering the Persian Gulf through the strait, while vessels exiting would travel through an Omani-controlled route. The Associated Press reported that Trump said a deal could come "as early as Wednesday or Thursday," and that no transit fees would be charged during an initial 60-day period.reuters+1

Iran's foreign ministry said on Tuesday that it had reached an agreement with Oman on the proposed shipping route and that a joint communiqué was in "final drafting stages," according to CNBC. However, markets remained cautious as the White House had not formally confirmed the arrangement. As FXStreet analyst Kathleen Brooks noted, "the market needs confirmation from the White House that this is all true" before pricing in a full reopening of the waterway.fxstreet+1

Markets Respond With Cautious Optimism

Brent crude edged up 0.3% to around $79.70 a barrel on Thursday, while U.S. West Texas Intermediate gained 0.2%, according to Tekedia. The moderation in oil prices followed a 5% drop earlier in the week after Trump said he was holding off on new attacks on Iran pending negotiations.tekedia+1

The Dow traded at a fresh record above 54,400 on Thursday morning, extending a remarkable winning streak driven in part by Iran diplomacy hopes. The pan-European STOXX 600 touched a record high, while London's FTSE 100 rose 0.3% and France's CAC 40 advanced 0.8%.ibtimes+1

Hani Redha, multi-asset portfolio manager at MetLife ↗ 3.83%, said markets had become increasingly resilient to Middle East developments. "It is a headwind when oil prices do spike, but we don't think that they're going to derail the cycle," he said.tekedia

Uncertainty Persists

Despite the optimism, the deal remains unconfirmed. The proposal would represent one of Washington's most notable concessions to Tehran if implemented, and analysts cautioned that formal approval from President Trump is needed before markets can fully price in a resolution to the five-month conflict. Investors were also awaiting Friday's U.S. nonfarm payrolls report, which could shape expectations for the Federal Reserve's next interest-rate decision.aljazeera+2