Oil prices plunged and stock markets rebounded after Donald Trump said the US would hold off on strikes against Iranian power plants, citing constructive discussions about ending the conflict in the Middle East.
The US president wrote on social media that the two countries had held talks about a COMPLETE AND TOTAL resolution - but Iran denied these talks had happened.
The price of Brent crude sank, while European and US shares rose following Trump's statement.
Trump had previously said he would obliterate Iranian power plants if the Strait of Hormuz shipping route was not reopened in 48 hours. Iran had said it would respond by targeting key infrastructure in the region.
The comments over the weekend had rattled financial markets, adding to fears that the US-Israeli war with Iran would be a prolonged conflict.
At one point on Monday, the price of Brent had hit $113 a barrel, but it tumbled in the aftermath of Trump's latest comments, falling to a low of $96 a barrel before rebounding slightly.
While oil fell, stocks rose. London's FTSE 100 index ended the day flat after being down more than 2% earlier on Monday.
Germany's Dax index also rebounded to close 1.2% higher while France's Cac ended up roughly 0.9%.
In the US, the S&P 500 index rose more than 1.1%, while the Dow Jones closed nearly 1.4% higher.
Stocks in Asia, which closed before Trump's latest comments, had seen heavy falls with Japan's Nikkei index dropping 3.5% and South Korea's Kospi down 6.5%.
Japan and South Korea have been impacted significantly by the conflict as they are heavily dependent on oil and gas that normally would pass through the Strait of Hormuz, one of the world's busiest oil shipping channels.
Since the war began on February 28, Iran has effectively blocked the waterway, through which about 20% of the world’s oil and liquefied natural gas passes. The ongoing conflict has led to soaring global fuel prices.
In a post on Truth Social, Trump said the US and Iran had discussed a complete and total resolution of our hostilities and instructed the military to postpone strikes against Iranian energy infrastructure for five days, contingent on the success of ongoing discussions.
However, Iran's foreign ministry swiftly denied Trump's claims of negotiations, labeling them as fabrications intended to manipulate financial markets.
Market analyst Susannah Streeter indicated that traders are still wary as oil remains above $100 per barrel, suggesting energy costs will continue to burden businesses and consumers amidst expectations of reduced oil flows from the Middle East.
Ahead of a meeting that was scheduled prior to Trump's statements, UK Prime Minister Sir Keir Starmer is set to discuss energy security, highlighting the economic impacts of the current crisis.
