Investors are shifting focus back to hopes of a diplomatic resolution between the US and Iran following a volatile session on Thursday.
US and Iranian negotiators are reported to have reached an agreement on a 60-day memorandum of understanding that would extend the current ceasefire between the two nations.
The reported deal would also kick off formal negotiations on Iran’s nuclear programme, according to Axios, which broke the story.
The report cites most of the agreement being finalised on Tuesday, with Iran’s leader having signed off but President Donald Trump yet to do so.
Such a deal would bring significant relief to oil markets, where prices edged closer to $100 per barrel on Thursday, stoking renewed fears over inflation.
Trump has simultaneously doubled down on threats to resume military action against Iran if no peace agreement is ultimately reached.
“A deal that wasn’t going to be good for us is the line ultimately,” the President told Fox News when asked what would trigger a return to military strikes.
“We’re playing it out, we’re going to see,” Trump added, leaving the outcome deliberately open-ended in public remarks.
Vice President JD Vance hinted on Thursday evening that a deal was “very close” but cautioned that the US was “not there yet.”
Trump is understood to have circulated the draft peace agreement among allies, including Israel, as part of the consultation process ahead of any formal signing.
In a move intended to accelerate negotiations, Pakistan’s foreign minister, Mohammad Ishaq Dar, is flying to Washington to meet US Secretary of State Marco Rubio.
The diplomatic activity follows a sharp sell-off on Thursday as tensions between the US and Iran escalated following an exchange of strikes between the two sides.
Markets are now watching closely for any formal confirmation that Trump has signed the memorandum of understanding, which could provide immediate relief to energy prices.