Global financial markets surged on Monday after the United States and Iran finalised a tentative peace deal to end their 107-day conflict, with the promise of reopening the Strait of Hormuz sending crude oil prices tumbling and igniting a powerful rally in equities from Tokyo to Mumbai. President Donald Trump confirmed the initial agreement on his Truth Social platform, while Iran’s Deputy Foreign Minister Kazem Gharibabadi told state television that a deal had been struck. Pakistani Prime Minister Shehbaz Sharif, who played a mediating role, announced that the formal signing would take place in Switzerland on Friday. The news pushed Brent crude below $84 a barrel, a drop of more than $3, and propelled India’s benchmark Sensex up by over 1,100 points in early trade, with the Nifty briefly reclaiming the 24,000 level. In Asia, the Nikkei and Kospi indices each gained more than 5%, while futures for the S&P 500 and Dow Jones pointed to strong openings on Wall Street.

The breakthrough comes after months of disruption that saw the vital waterway — through which one-fifth of global oil supplies passes — effectively blockaded by U.S. naval forces, driving energy costs sharply higher and stoking inflationary pressures worldwide. The war had rattled confidence across emerging and developed markets alike, with central banks already grappling with the price shocks. Viewed from Washington, the deal represents a significant geopolitical pivot, authorising an immediate end to the naval blockade of Iranian ports. Yet the agreement’s architecture remains delicate: broader negotiations on Iran’s nuclear programme are expected to continue over the next 60 days, leaving room for renewed volatility should those talks falter.

From Tehran, officials signalled that implementation would not begin until the in-person signing in Switzerland, and added a potentially contentious detail — that traffic through the Strait of Hormuz would be regulated jointly by Iran and Oman. Analysts in London noted that this arrangement could introduce a de facto toll system or other restrictions, complicating the return to free trade and tempering the initial euphoria among shipping and energy markets. On trading floors in Mumbai, however, the immediate relief was palpable, with the BSE Midcap and Smallcap indices also climbing sharply and heavyweight stocks such as Reliance Industries gaining over 2%.

Looking ahead, market strategists caution that while the deal removes a major tail risk, it may take months for oil prices to fully stabilise after the severe disruptions of the war. The prospect of a phased easing of supply bottlenecks offers some reassurance to import-dependent economies, particularly in Asia, but the geopolitical landscape remains fraught. The coming week’s G7 summit in France, where Trump is expected to meet Middle Eastern leaders and Ukraine’s President Zelenskiy, will test the durability of this diplomatic opening. For now, the markets have chosen to price in peace — but the memory of the conflict’s rapid escalation will keep a premium on caution.